Ratings agency ICRA has lowered domestic passenger vehicles (PVs) wholesale volume growth forecast to 1-4 per cent for FY26, citing concerns over high inventory levels and shortage of critical components such as rare earth magnets for especially for electric vehicles. It had earlier pegged the passenger vehicles (PV) wholesale volume growth for FY26 at 4-7 per cent over FY25.

However, it said steady model launches from original equipment manufacturers (OEMs) are expected to partially support the overall industry volumes in the current fiscal year. It noted, in May this year, domestic PV retail sales witnessed a 13.6 per cent month-on-month contraction at 3,02,214 units as against 3,49,939 units in April 2025, primarily due to subdued consumer sentiment amid heightened geopolitical tensions in northern India following the India-Pakistan conflict. 

On the other hand, the two-wheeler segment demonstrated stronger performance, with retail volumes growing 7 per cent year-on-year supported by robust rural demand and a healthy harvest season. Looking ahead in the two-wheeler segment, ICRA said it maintained a cautiously optimistic outlook, projecting 6-9 per cent wholesale volume growth for FY26, driven by steady replacement demand, a potential urban market recovery, and healthy rural incomes, contingent on a normal monsoon.