Blitz Bureau
New Delhi, 1 October: Passenger vehicle wholesale volumes grew 29 per cent in the first five months of fiscal 2027 (April-August) but are expected to moderate to 4 to 6 per cent for the full fiscal year on a high base, a report said.
Further, recent price hikes announced by the original equipment manufacturers (OEMs), a weaker than expected monsoon could dampen rural sentiments and adversely impact volume growth in H2 FY2027, the report from ICRA said.
The report added that retail sales expanded roughly 27 per cent in 5M FY2027, supported by traction of newly launched models, an extended summer wedding season and the sustained positive impact of the revised Goods and Services Tax (GST) rates.
“Increasing operating leverage, cost control measures and price hikes, is expected to help OEMs maintain healthy margins, which saw around 200 bps compression in Q1 FY2027. The credit profile of OEMs is likely to remain strong, supported by low leverage, robust liquidity and/or strong parentage,” the report noted.
Inventory levels in August rose by five days sequentially to 38–40 days driven by pre-festive stocking, but remain well below the 56-day levels in August 2025.
The utility vehicle (UV) segment continues to expand its share in overall industry sales (68 per cent in 5M FY2027), led by a shift in customer preferences and a slew of new model launches. Demand for the entry-car segment has revived somewhat after the GST rate cuts and volumes have seen an uptick from H2 FY2026.
The penetration of alternative powertrains, such as compressed natural gas (CNG) and EVs, steadily rose to 34 per cent of overall volumes, aided by the introduction of new models and an improving fuelling or charging network.
Capex outlay for original equipment manufacturers (OEMs) is estimated to remain high at Rs 250- 300 billion per annum at about 5-6 per cent of revenues over the next few fiscal years.
The capex would provide for substantial outlay towards new product development, including enhancement of capabilities or platforms for EVs.
