India’s Car Industry Is Set For Slowest Growth In Five Years In FY26

Dispatches to dealerships rose by a mere 2.6% year-on-year to 4.34 million units in the fiscal ended March 31, 2025, according to industry estimates. While that’s four years of continuous growth, it’s come at the slowest pace since the pandemic.

Market leader Maruti Suzuki India Ltd., which itself saw subdued domestic volumes in the previous financial year, expects the growth to be slower still in FY26.

“If you see the CAGR (compounded annual growth rate) for the last five years, it’s about 4.6%. SIAM, at the beginning of the year (FY25) forecast 3-4% growth, but it’s now about 2.6-2.7%,” Partho Banerjee, senior executive officer (marketing & sales) at India’s largest carmaker, said during a media call on Tuesday. “Hereon, it will moderate even further to 1-2% (in FY26).”

Global market uncertainties, a high base, weakening demand, rising prices, tumbling stock markets, and job insecurity are prompting consumers to postpone car purchases, said Puneet Gupta, director, S&P Global Mobility - India and ASEAN.

Sure, there’s rural revival but that can prop up sales only so much.

The PV segment may see around 3% growth in fiscal 2026, which is lowest in the last few years, he said. There is no increase in first time buyers and car penetration in India continues to be low, at around 36 cars for every 1,000 people, he said.

Still, there’s a silver lining — exports.

India is increasingly emerging as an export hub for some of the world’s largest carmakers. Already, Maruti Suzuki and Hyundai Motor India Ltd. have made their intentions known to make in India for the world. It’s no surprise, then, that exports are already at a peak.

According to industry estimates, about 750,000 cars were shipped abroad in FY25—an annual growth of 12-15% over the 672,000 units exported in FY24. Maruti Suzuki and Hyundai India accounted for 332,585 units and 163,386 units, respectively.

Dispatches to dealerships rose by a mere 2.6% year-on-year to 4.34 million units in the fiscal ended March 31, 2025, according to industry estimates. While that’s four years of continuous growth, it’s come at the slowest pace since the pandemic.

Market leader Maruti Suzuki India Ltd., which itself saw subdued domestic volumes in the previous financial year, expects the growth to be slower still in FY26.

“If you see the CAGR (compounded annual growth rate) for the last five years, it’s about 4.6%. SIAM, at the beginning of the year (FY25) forecast 3-4% growth, but it’s now about 2.6-2.7%,” Partho Banerjee, senior executive officer (marketing & sales) at India’s largest carmaker, said during a media call on Tuesday. “Hereon, it will moderate even further to 1-2% (in FY26).”

Global market uncertainties, a high base, weakening demand, rising prices, tumbling stock markets, and job insecurity are prompting consumers to postpone car purchases, said Puneet Gupta, director, S&P Global Mobility - India and ASEAN.

Sure, there’s rural revival but that can prop up sales only so much.

The PV segment may see around 3% growth in fiscal 2026, which is lowest in the last few years, he said. There is no increase in first time buyers and car penetration in India continues to be low, at around 36 cars for every 1,000 people, he said.

Still, there’s a silver lining — exports.

India is increasingly emerging as an export hub for some of the world’s largest carmakers. Already, Maruti Suzuki and Hyundai Motor India Ltd. have made their intentions known to make in India for the world. It’s no surprise, then, that exports are already at a peak.

According to industry estimates, about 750,000 cars were shipped abroad in FY25—an annual growth of 12-15% over the 672,000 units exported in FY24. Maruti Suzuki and Hyundai India accounted for 332,585 units and 163,386 units, respectively.

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Renault Group is set to buy out Nissan Motor Co. from their joint venture in India for complete ownership of their car plant in Tamil Nadu.

The French carmaker will acquire 51% shareholding of the Japanese carmaker in Renault Nissan Automotive India Pvt. to expand its international business, according to a company statement on Monday. The JV plant will continue to produce Nissan models, including the Magnite SUV, as well as serve as a hub for its exports business. 

The transaction, subject to regulatory approvals, is expected to be completed mid-2025.

The carmakers will continue to operate jointly Renault Nissan Technology & Business Centre India—a global research & development centre.

On April 2, 1875, Walter Percy Chrysler—the founder of Chrysler cars—was born in Wamego, Kansas. He didn’t enter the American automobile industry until he was 36. 

After a stint at General Motors, where he revolutionised Buick’s manufacturing system with Henry Ford’s assembly line to triple production, he joined Maxwell Motor Co. and immediately went to work on reviving it.

He introduced the Chrysler Six in January 1924 during the New York Automobile Show. The genius of Chrysler’s new car was not only its engine or stylish appearance but its price: under $2,000 for average folk. The low-cost car was a hit with the public, and some 32,000 units were built and sold in a single year. The Chrysler brand was such a success that in 1925 the Maxwell was reorganised into the Chrysler Corp.

The corporation became a major company in the American automotive industry, and Chrysler was named Time magazine’s 1928 Man of the Year. 

Today, Chrysler is owned by the Stellantis Group.

That’s all from us this week. Watch this space for more. Read more at ndtvprofit.com/auto