New Delhi: Passenger vehicle sales are likely to grow 4-6 percent this fiscal, driven by sustained demand momentum, improving affordability following GST rate cuts, and traction in utility vehicles, a report said.

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Passenger vehicle wholesale volumes recorded a strong 27 percent year-on-year growth in the last fiscal, reaching 4.4 lakh units, while retail sales grew 33 percent on the back of robust consumer demand, newly launched models, and an extended summer wedding season, according to the report by ratings agency Icra.

However, the agency said that rising fuel and commodity prices, along with concerns around a weak monsoon, remain key factors to watch.

According to Icra, utility vehicles continued to dominate the segment, accounting for nearly 68 percent of overall passenger vehicle sales in FY2026, while demand recovery was also visible across mini and compact car categories following GST rate cuts in September last year.

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Exports remained healthy, rising 13 percent annually in May this year, reflecting an increasing supply push by Indian automakers in global markets.

At the same time, electric vehicle adoption also strengthened, with EV penetration in the passenger vehicle segment rising to nearly 6 percent in early FY2027, it said.

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