164 Integrated Annual Report 2025-26 Industry Structure, Overview and Trends Automotive Industry In Calendar Year (‘CY’) 2025, worldwide sales of Passenger Cars and Commercial Vehicles increased to 99.8 million, reflecting a 4.7% increase compared to CY 2024 sales of 95.3 million units. Globally, passenger cars and commercial vehicles recorded growth rates of 5.2% and 3.5% respectively. India ranked third in the passenger vehicle segment, following China and the United States of America. The fastest growing segment worldwide was that of Electric Vehicles (‘EVs’), which has grown at a 48% CAGR over the last five years. (Source: Organisation Internationale des Constructeurs d’Automobiles) The Sector has already surpassed its FY19 pre-COVID levels across all four segments of Passenger Vehicles (‘PV’), Commercial Vehicles (‘CV’), Three-Wheelers (‘3W’), and Two-Wheelers (‘2W’). The long-term growth outlook for the Indian auto industry remains highly positive, supported by multiple structural and policy factors. These include robust economic growth, rising consumer confidence, strong Government push towards electrification, Production-Linked Incentive (‘PLI’) Schemes and ‘Make in India’ initiatives that are boosting domestic manufacturing and localisation of critical components. Additionally, these factors are driving increased investments in R&D, innovation and advanced technologies such as connected, autonomous, shared, and electric mobility. Demand growth during the period was supported by new product launches across segments, rising disposable incomes enhancing consumer purchasing power, improved accessibility to financing, and continued expansion in rural markets. The increasing preference for advanced technologies has further contributed to this trend. The Indian auto industry today is accelerating its transition to cleaner and green mobility. The Government of India has further strengthened this transition by approving a comprehensive E-Vehicle Policy, positioning India as a global manufacturing hub for electric vehicles. This policy will provide Indian consumers access to the latest EV technologies, boost the 'Make in India' programme and domestic manufacturing capabilities, and strengthen the EV ecosystem. In addition, the Government launched the PM E-DRIVE scheme, with an outlay of Rs. 10,900 crore over two years (1st October 2024 – 31st March 2026), to accelerate green mobility and support the development of a robust EV manufacturing ecosystem. Complementing this, the Voluntary Vehicle Modernisation Program (‘VVMP’) aims to phase out unfit, polluting vehicles, thereby improving road safety, passenger safety, and vehicular efficiency while creating a sustainable ecosystem for cleaner mobility. Auto Industry in FY26 In FY26, passenger vehicles, commercial vehicles, three-wheelers, and two-wheelers reached their highest ever sales levels. Passenger vehicles posted a 7.9% growth at 4.6 million units and commercial vehicles recorded 1.1 million units, a growth of 12.6%. Three-wheeler sales stood at 0.8 million units, with growth of 12.8%, while two-wheeler sales reached 21.7 million units, rising 10.7%. Overall, the Indian auto industry (excluding two-wheelers) achieved record sales of 6.6 million units, reflecting a 9.3% year-on-year growth. Between FY16 and FY26, the Utility Vehicle (‘UV’) segment has been the primary driver of passenger vehicle growth. Over this period, UVs registered a CAGR of 18.1%, compared to 5.2% for overall passenger vehicles. The UV share of the passenger vehicle market has surged from 21.0% in FY16 to 66.9% in FY26. This surge in UV sales has been driven by rising customer preference for UV-styled vehicles and a wave of new product launches. Over the past two years, the UV segment has witnessed 12 new launches, while the car segment has seen none. The Indian auto industry has witnessed new launches in the electric passenger vehicle (‘PV-EV’) segment. In FY26, PV-EVs recorded sales of 1.6 lakh units, reflecting strong growth of 93.9% and achieving EV penetration of 3.4%. Electric vehicle penetration in India has been primarily driven by electric three-wheelers (‘E-3W’). Key factors include improving operating economics, ease of deployment for first and last-mile connectivity (particularly around metro stations), and the rapid expansion of start-ups acting as three-wheeler aggregators. In FY26, a total of 2.6 lakh E-3Ws were sold, marking 44.7% growth and accounting for 31.2% of the overall three-wheeler industry. Segment (Domestic Sales) PV CV 3W 2W FY19 33,77,389 10,07,311 7,01,005 2,11,79,847 FY26 46,43,439 10,79,871 8,36,231 2,17,05,974 CAGR FY19-26 4.7% 1.0% 2.6% 0.4%
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