Indian passenger vehicle manufacturers are significantly increasing production and stocking dealerships in anticipation of strong festival season demand, with new launches planned and supply bottlenecks being addressed. However, the industry faces potential moderation in growth during the second half of FY27 due to a high base from last year's post-GST surge, commodity inflation, and elevated inventory levels.
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With passenger vehicles (PVs), two-wheelers and three-wheelers registering double-digit growth, manufacturers raise production as the industry enters the festival season.
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India's passenger vehicle industry is poised for a record-breaking year in 2026, propelled by robust dispatches in the first half of the calendar year and strong demand for utility vehicles, despite facing several economic challenges.
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Luxury carmakers are shifting into high gear with a mix of product launches, personalised experiences and lifestyle-led engagement.
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The hotels and restaurants of all categories in Puri have been packed till the end of the nine-day festival, while several organisations have erected makeshift accommodations to give shelter to the devotees and tourists coming from across the country and abroad.
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India's passenger vehicle (PV) industry is projected to experience moderated growth in FY27, following a strong rebound in H2FY26, primarily due to the high base effect, absorbed pent-up demand, and the lingering impact of geopolitical tensions in West Asia.
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Festivals also contribute to the rise in overall automobile retail sales, says dealers association.
While GST on ICE vehicles was brought down significantly, for electric cars it remained at 5 per cent.
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India's auto retail sector achieved record-breaking sales of 2,96,71,064 units in FY26, a 13.3% increase, primarily driven by the implementation of GST 2.0 which reduced the tax burden on mass-segment vehicles, according to the Federation of Automobile Dealers Associations (FADA).
'We expect this festival buying spirit to continue in October as well, with upcoming festivities including Dhanteras and Diwali, which traditionally witness spirited buying from customers.'
India's luxury auto market is rebounding after a slow start to 2025, with GST 2.0 emerging as the main catalyst.
'Some buyers get carried away by festival offers and purchase higher variants or larger vehicles than they truly need, which impacts running cost and long-term affordability.'
Tata Motors Passenger Vehicles Ltd on Tuesday said it delivered over 1 lakh vehicles in 30 days from Navratri to Diwali, a growth of 33 per cent over the same period last year. The deliveries were led by SUVs with electric vehicles also showing strong traction, Tata Motors Passenger Vehicles Ltd managing director and CEO Shailesh Chandra said in a statement.
Passenger vehicle sales in India reached a record high of 4.7 million units in FY26, boosted by strong performances from major automakers and the implementation of GST 2.0.
'The market is still very bullish. The demand is so strong that for eight models, we have no units in our factories to dispatch to dealers,' said Partho Banerjee, senior executive officer, marketing & sales, Maruti Suzuki India (MSIL).
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For hatchbacks and sedans, offers range between Rs 40,000 and Rs 80,000 while SUVs and multi-purpose vehicles carry benefits exceeding Rs 1 lakh.
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India may see its busiest EV festive season in 2025 with SUVs, luxury cars and scooters set to launch, but rare-earth supply bottlenecks risk delaying rollouts.
