Auto industry posts record Q1 sales; festive demand seen lifting growth

India's automobile industry recorded its strongest-ever first quarter, with record sales across key segments, while SIAM expects festive demand and easier financing to sustain momentum

India’s automobile industry recorded its highest-ever first quarter sales in 2026-27 (Q1FY27) across passenger vehicles, commercial vehicles and three-wheelers, supported by lower goods and services tax (GST) rates, easier financing and new model launches.

 

The robust performance also benefited from a favourable base, as demand remained relatively subdued in the year-ago period, according to the Society of Indian Automobile Manufacturers (Siam).

 

Passenger vehicle sales rose 25.9 per cent year-on-year (Y-o-Y) to 1.27 million units in the April-June quarter.

 

Utility vehicles continued to dominate the segment, accounting for about 68 per cent of total passenger vehicle sales. They grew 28.6 per cent during the quarter, while passenger car sales increased 21.3 per cent.

 

Two-wheeler sales grew 20.3 per cent to 5.63 million units, with scooters significantly outpacing motorcycles. Scooter sales rose 30.8 per cent during the quarter, compared with 14 per cent growth in motorcycles.

 

Commercial vehicle sales rose 18.3 per cent to 264,831 units, aided by replacement demand and higher activity in the mining and cement sectors. Within the segment, goods carriers outperformed passenger carriers, underpinning the overall growth.

 

Three-wheeler sales climbed 29.7 per cent to 214,339 units, driven by growth in both passenger and goods carriers. Siam said increasing economic activity in urban areas and easier financing availability also supported demand during the quarter.

 

Exports also emerged as a key growth driver during the quarter, with all major vehicle segments recording their highest-ever first-quarter overseas shipments.

 

Passenger vehicle exports rose 8.8 per cent, while two-wheeler exports grew 36.6 per cent, commercial vehicles increased 43.3 per cent and three-wheelers surged 57.7 per cent.

 

Siam attributed the growth to healthy demand from Latin America, Africa and South Asia, alongside improving demand from Europe and Japan for passenger vehicles and stronger pick-up truck demand from Southeast Asia.

 

“The strong performance across segments in Q1 of 2026-27, despite headwinds arising from disruptions in West Asia, can be attributed to supportive domestic demand, aided by lower GST rates, softer financing costs, low base effect and introduction of new models. While overall consumer sentiment and demand remain steady, the industry continues to closely monitor geopolitical developments and the progress of the monsoon,” Siam president Shailesh Chandra said.

 

Siam director general Rajesh Menon said all vehicle segments recorded high double-digit growth over the corresponding quarter last year. And, passenger vehicles reached 1.27 million units and commercial vehicles crossed 265,000 units during the period.

 

Looking ahead, Siam said demand is expected to remain steady during the July-September quarter as the industry enters the festival season.

 

It noted that lower vehicle costs following GST 2.0 and easier availability of finance continue to support demand, while improving rainfall has reduced the monsoon deficiency to some extent.

 

Inflation remained benign during the first quarter and did not weigh on consumer demand.

 

However, the industry said commodity prices remain a key concern and it will continue to monitor geopolitical developments in West Asia and progress of the monsoon.