Auto body holds firm on 5–6% FY27 growth target despite headwind

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• Passenger vehicle sales expected to close FY26 with a growth of 5-6%
• FY27 total PV sales is estimated to be at 4.83 million
• Consumer sentiment, new launches will play a major role in driving demand

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India’s top automotive lobby body the Society of Indian Automobile Manufacturers (SIAM) has projected a moderate growth outlook for the domestic passenger vehicle industry, pegging sales expansion at 5–6 percent for both FY26 and FY27, amid persistent global and cost-related challenges.

The projection was shared during a SIAM conclave held a couple of weeks ago, which brought together all major passenger vehicle manufacturers operating in India. The industry-wide consensus reflects cautious optimism, balancing policy support with lingering macroeconomic uncertainties. A 6 percent growth over FY25 will push the FY26 total to 4.55 million and a further 6 percent growth on that will put the FY27 total at 4.83 million.

Tarun Garg, Managing Director and CEO of Hyundai Motor India, said the guidance marks a slight improvement over the historical growth trend. “SIAM held a conclave where they provided guidance of 5–6% growth in the industry. If you look at the CAGR (compounded annual growth rate), it has been around 4–5% (over the previous years),” Garg said in a post earnings call on February 2.

While measures such as the GST cut have provided some relief and demand stimulus, Garg noted that external factors continue to weigh on buyer sentiment. “Though the GST cut benefit is there, geopolitical challenges remain, which impacts buyer sentiments,” he added, highlighting concerns ranging from global conflicts to supply chain disruptions and inflationary pressures.

SIAM did not provide comments on sales projections provided by it, when contacted. The April to December period saw the passenger vehicle industry clock 6 percent year-on-year growth in volumes to 3.32 million units, with utility vehicles growing by nearly 8% to 2.2 million.

Cost pressures remain another key concern for automakers. A senior Hyundai official said the industry has been navigating a difficult operating environment, marked by rising input costs and volatility in global commodity markets. Hyundai raised prices on its models in January, 2026.

“The industry has been going through tough times. To some extent, we have tried to absorb the cost, along with a price increase in January,” the official said.

Looking ahead, Hyundai said it will closely track commodity price movements, particularly in precious metals, which are critical inputs for automotive components. “There is huge volatility in precious metals. We will have to undertake countermeasures to mitigate this impact as much as possible,” the official added.

The steady increase in prices of raw materials and constant slide in the value of the Indian currency against all major currencies, is pushing up costs.

Industry executives say the projected 5–6% growth reflects a realistic assessment of current conditions—steady demand recovery on one hand, and geopolitical uncertainty and cost inflation on the other. While structural drivers such as improving infrastructure, rising aspirations, and policy support continue to underpin long-term growth, near-term performance is expected to remain measured rather than exuberant.

SIAM’s outlook suggests that the passenger vehicle industry is entering a phase of stable, sustainable growth, with manufacturers focusing on cost management, pricing discipline, and portfolio optimisation to navigate an increasingly complex global environment.