India’s Two-Wheeler and Passenger Vehicle Sectors Projected to Lead FY27 Growth

India’s two-wheeler and passenger vehicle (PV) sectors are anticipated to outperform other automotive segments in fiscal year 2027, with industry players projecting volume growth of 8 to 10 percent. A research report by ICICI Direct attributes this projection to broad-based sales acceleration across multiple vehicle categories.

Wholesale dispatches maintained positive momentum through the recent monthly cycle, supported by macroeconomic policy drivers and improving underlying demand conditions. India’s automotive original equipment manufacturers (OEMs) posted healthy volume prints for August 2026, registering double-digit year-on-year growth across various vehicle categories.

Retail activity mirrored this wholesale trend. Data from Vahan vehicle registrations for August 2026 reached approximately 24 lakh units, marking a 16 percent increase compared to 20.7 lakh units registered in August 2025. The report highlighted that tailwinds from GST 2.0 continue to support underlying consumer demand.

In the two-wheeler category, Bajaj Auto recorded a 30 percent year-on-year expansion, driven by a 53 percent surge in exports and a 10 percent rise in domestic volumes. TVS Motor reported an increase of approximately 20.5 percent to 5.9 lakh units, including 29 percent export growth. Eicher Motors’ Royal Enfield division saw an 11 percent rise, reaching about 1.26 lakh units.

Within the passenger vehicle segment, Tata Motors PV registered a 56 percent year-on-year growth to around 68,000 units on a low base, alongside electric vehicle volumes of 16,549 units, up 94 percent. Maruti Suzuki posted volumes of approximately 2.16 lakh units, representing a 21 percent increase. Mahindra & Mahindra recorded a 50 percent jump to about 59,000 units, while Hyundai volumes reached roughly 66,000 units, reflecting a 9 percent increase despite outbound logistical constraints.

Commercial vehicles also reported solid figures, led by medium and heavy commercial trucks and initial signs of recovery in passenger buses. Tata Motors CV led the segment with dispatches rising 49 percent to around 44,000 units. Ashok Leyland noted a 38 percent increase to roughly 21,000 units, and VECV grew 18 percent to approximately 8,400 units. The report noted a cautiously optimistic near-term outlook for the industry, supported by a revival in the domestic capital expenditure cycle and replacement demand driven by an ageing fleet.

Conversely, the tractor segment faces a more moderate single-digit expansion forecast for FY27. This follows the high base of FY26 and projections of a below-normal monsoon at 90 percent of the long-period average. Escorts Kubota led the tractor growth charge with a 19 percent rise to about 10,000 units, while Mahindra & Mahindra recorded a 5 percent increase to approximately 29,500 units.

"The projected 8-10 percent volume growth for two-wheelers and passenger vehicles in FY27 highlights resilient domestic consumption and improving retail demand, as reflected in the robust Vahan registration data. While segments like tractors face headwinds from a high base and monsoon forecasts, the overall auto sector's performance—bolstered by policy tailwinds and replacement demand—serves as a positive indicator for broader industrial and manufacturing activity in the Indian economy." — Dr. Shishir Gupta, Founder & CEO, StartupLanes