Due to the ongoing geopolitical tensions in West Asia, there have been supply chain disruptions and higher logistics costs in India’s passenger vehicle industry. It was assumed that these reasons could affect the sales of cars in the Indian market.
A recent report by The Economic Times reveals that the car sales in India are projected to reach 4.7 million units this fiscal year (FY26), fueled by robust domestic demand. It is said that volumes could have been higher if freight bottlenecks and higher transportation costs had not constrained dispatches from factories in the closing month of FY26.
According to dealers across India, there have been strong bookings ahead of the fiscal year-end, though the inventories have tightened due to slower dispatches from automobile manufacturers. But amid these restrictions, with domestic demand holding firm and supply conditions expected to stabilise, the industry is assumed to cross the 5 million annual sales mark in FY27.
As per an automobile manufacturer, if the freight rates and logistics costs remain high, wholesale could see some dip even though retail demand remains intact. Meanwhile, as per a dealer, a steady supply is becoming a challenge as this month the supply from manufacturers is down by about 10-15%.
In such situations, the companies say that the strength of domestic demand remains the industry’s primary growth driver.
The report further mentioned that Maruti Suzuki recently revealed that it is closely tracking developments in the Middle East, Mahindra & Mahindra saw an increase in domestic SUV sales in February (reflecting sustained demand for sport-utility vehicles), and Tata Motors also reported strong momentum in passenger vehicle sales driven by demand for SUV and electric vehicle portfolio.
