Passenger vehicle sales rise 16% in March, FY hits record high

New Delhi: Domestic rose by 16% in March, elevating annual volumes to a record 4.7 million vehicles in the just-ended fiscal year, largely fuelled by enhanced affordability after tax cuts last September and introduction of several new models.

Sales of cars, sedans, and utility vehicles rose 8.3% to 4.7 million units in FY26, from 4.34 million units the year before. The Centre cut the goods and services tax (GST) on passenger vehicles with effect from September 22. Companies cut prices in response to the reduced tax rate, making it more attractive for consumers to buy cars.

Senior auto industry executives said while there hasn’t been any major disruption to demand, supply, and production so far due to the Iran war, they are closely monitoring global geopolitical developments. For now, executives expect the demand momentum to sustain and domestic car sales to grow about 5% this fiscal year.

Carmakers in India mostly report wholesale dispatches from factories to dealerships and not retail sales to customers.

Partho Banerjee, senior executive officer, marketing and sales at market leader said the FY26 car industry growth needs to be evaluated in two halves. “While the first half of the year was challenging, GST 2.0 unlocked demand in H2 helping us achieve our highest-ever domestic sales in FY26,” he said. Maruti closed the year with a 3.4% rise in sales at 1.82 million vehicles.

Banerjee said while the automaker is closely monitoring the geopolitical developments, the market continues to offer opportunities. “We have three tailwinds going well – the GST cuts by the Centre which lowered prices of vehicles, the interest rate cuts by the RBI which reduced EMIs, and the raising of the income tax ceiling last year which put more money in the hands of customers for down payments,” he said. “While there are no signs of headwinds yet (no disruption in supplies or production due to the war), commodity prices are on rise since December, We would now have to review and partially pass on some of these costs to customers.”

Maruti closed FY26 with orders outstandings of 190,000 vehicles and network stocks of 12 days. Exports last fiscal surged 34% to 447,000 units.

With sales of 66,192 vehicles in March, Tata Motors ranked second after Maruti. Mahindra & Mahindra and Hyundai Motor India followed with sales of 60,272 units and 55,064 units, respectively. In annual sales though, Mahindra raced ahead of Tata Motors to claim the second position with its highest-ever sales of 660,276 units in FY26. Tata Motors sold 631,387 vehicles.

“The industry witnessed a strong rebound in the second half, posting double digit growth, supported by GST 2.0 implementation and a robust festive season,” said Shailesh Chandra, MD and CEO, Tata Motors Passenger Vehicles. “Customer preference for greener technologies gained further momentum (last fiscal), with CNG volumes growing at 20% YoY and EV volumes surpassing the milestone of 200,000 units. This growth was driven by improving consumer confidence in EVs and wider participation with all major OEMs launching new products, offering more choice.”

Going forward, Chandra said industry momentum is expected to sustain led by growth in SUVs, CNG, and electric vehicles.

Tarun Garg, MD & CEO, HMIL, said, “Continuing the momentum gained in 2026, we (Hyundai) have achieved highest-ever quarterly domestic sales of 1,66,578 units in Q4 FY2025-26.”

Japan’s Toyota, which operates in a joint venture with Kirloskar Group, too saw sustained demand with sales growing 24% to 35,125 units in March.

In the commercial vehicle segment, market leader Tata Motors recorded 18% sales growth at 45,825 units last month. Sales at Chennai-based Ashok Leyland grew 5% to 23,743 units.

Girish Wagh, MD &CEO, Tata Motors (CV), said, “FY26 saw a subdued first half for the commercial vehicle industry, followed by a decisive recovery in H2 as demand conditions improved with the rollout of GST 2.0 and gained momentum through Q3 and Q4.”

Wagh, however, added in March, the monthly double-digit YoY sales growth saw some moderation amid the ongoing conflict in West Asia and its impact on select sectors of the economy. “We have intensified efforts to support customers by ensuring smooth and uninterrupted logistics operations as they address emerging operating challenges…Looking ahead, we remain agile, closely tracking geopolitical developments and the evolving macro environment,” he said. “Diesel prices remain a key monitorable, given their impact on total cost of ownership. In parallel, we are actively assessing the risk landscape and have put in place appropriate mitigation measures to strengthen resilience and manage production continuity.”

In the farm equipment sector, Mahindra reported 33% growth at 43,403 tractors last month.

“A significant part of this high growth was driven by the full Navratri season falling entirely in March’26, unlike last year when it was split between March and April,” said Veejay Nakra, president, farm equipment business at Mahindra.

Domestic sales only

Source: Companies