India’s Light Vehicle (LV) market moderated in February 2026, reflecting the typical post-January normalization after strong start-of-year dispatches. Despite the sequential pullback, underlying demand remained healthy, with wholesales rising by 12% year-on-year (YoY). However, the selling rate eased to an annualized 5.6 million units, down 5% month-on-month (MoM).
Total LV wholesales reached an all-time February high of 485k units, representing a MoM decline of 7%, but a YoY rise of 12%. Passenger Vehicle (PV) sales declined by 7% MoM but rose by 11% YoY to 414k units, while Light Commercial Vehicle (LCV) volumes (≤6T gross vehicle weight) reduced by 5% MoM and grew by 18% YoY to 70k units, highlighting broad-based strength across segments.
February’s outcome was supported by healthy retail off-take, lean dealer stocks, and demand carryover linked to GST-led affordability gains. Consumer preference continued to skew toward SUVs and Compact SUVs, while resilient rural and Tier-2/3 demand provided additional support. That said, rising geopolitical tensions in the Middle East are becoming a clearer watchpoint, with early signs of disruption to supply chains, logistics routing, and energy costs beginning to influence production planning, lead times, and export flows.
On the retail side, PV registrations rose to 395k units (+26% YoY) and LCV volumes increased to 56k units (+24% YoY), according to the Federation of Automobile Dealers Associations (FADA). This indicates solid conversion of enquiries into deliveries and suggests that wholesales were largely aligned with end-demand rather than channel stocking.
Dealer inventory tightened further, with PV inventory easing to 27–29 days by the end of February, closer to FADA’s 21-day benchmark. This reflects improved channel discipline, supported by strong SUV demand, a gradual recovery in entry-level segments, and better product availability. Higher enquiry conversion also points to healthier retail absorption, though selective OEM price hikes could weigh on near-term demand.
We have slightly downgraded our Indian LV outlook to reflect a more cautious external environment and potential cost pressures. Sales are now forecast to grow by 7% YoY to 5.5 million units in 2026, with PVs up 7% YoY and LCVs up 5% YoY. Total LV sales are projected to reach 6.9 million units by 2032, supported by rising urbanization, wider model availability, and improving financing access.
Seasonal March factors (including Holi, Gudi Padwa, and Navratri) and year-end depreciation benefits should support demand and production. However, the conflict in the Middle East keeps risks high, potentially sustaining elevated oil/LNG prices and disrupting trade routes. For India, this could raise import-driven energy, logistics, and manufacturing costs, while instability in shipping corridors may weigh on exports and add supply-chain uncertainty. As such, we will continue to monitor developments and update our outlook accordingly.
