New Delhi: India’s automobile industry recorded strong growth across passenger vehicles, two-wheelers and commercial vehicles during the second quarter of FY2027, driven by rising SUV demand, expanding electric vehicle adoption and resilient consumer spending. Passenger vehicle wholesale sales climbed 30.7% year-on-year to 1.4 million units, while commercial vehicles registered 28.8% growth and two-wheelers advanced 15.1%, according to the sixth edition of Deloitte India’s Wheelwatch tracker.
The report highlights a changing automotive landscape in which buyers are increasingly favouring feature-rich SUVs, premium motorcycles and alternative-fuel vehicles. Electric two-wheeler penetration crossed the 10% threshold for the first time, while electric passenger vehicle registrations nearly doubled.
The July–September 2026 quarter also benefited from favourable financing conditions and a comparatively low base ahead of GST rate reductions, although rising wholesale inflation and uneven commodity costs continued to challenge manufacturers.
Rajat Mahajan, Partner and Automotive Sector Leader, Deloitte India, said: “FY2027 has maintained its strong start. Passenger and commercial vehicle growth accelerated in the second quarter, while two-wheeler demand holding firm on a higher base. A low pre-GST-cut base also aided growth. Strong vehicle financing supported purchases despite accelerating wholesale inflation.”
SUVs Remain the Driving Force Behind Passenger Vehicle Growth
India’s passenger vehicle market recorded wholesale sales of approximately 1.4 million units during Q2 FY2027, representing a 30.7% year-on-year increase. Growth accelerated from 25.9% in the preceding quarter, with SUVs continuing to reshape purchasing preferences.
Compact SUVs emerged as the strongest-performing passenger vehicle category, recording 53.1% year-on-year growth and gaining 3.3 percentage points in market share. Sub-compact SUVs followed with 31% growth, reinforcing demand for vehicles that combine practicality, technology and relatively accessible pricing.
The ₹12–20 lakh price category delivered the highest growth among passenger vehicle price bands at 33.6%, gaining 1.2 percentage points in market share. The figures suggest that customers are increasingly willing to spend more for additional features, safety equipment and technology, provided they see sufficient value in the purchase.
Traditional segments faced greater competition. Mid-size SUVs lost 1.9 percentage points of market share, while sedans grew by a comparatively modest 9.5%.
In an increasingly SUV-focused market, conventional body styles appear to be finding that four wheels and a boot are no longer enough to win every showroom argument.
However, retail passenger vehicle sales grew 22.2%, slower than wholesale volumes, indicating that the sharp increase in manufacturer dispatches was not fully matched by customer deliveries during the quarter.
Electric Cars Nearly Double as CNG Challenges Petrol
Alternative powertrains continued gaining ground in India’s passenger vehicle market.
Electric passenger vehicle registrations increased 93.6% year-on-year to approximately 97,000 units during Q2 FY2027. EV penetration rose to 6.7%, compared with 6% in the previous quarter.
CNG vehicles also registered substantial growth, with registrations increasing approximately 50% year-on-year to 233,000 units. Their market share reached 16.2%, making CNG a considerably larger alternative to petrol than battery-electric vehicles by registration volume.
Petrol’s share declined by 2.8 percentage points quarter-on-quarter to 42.6%, while diesel gained 1.8 percentage points to reach 33.6%.
According to Deloitte, lower running costs have become an important consideration for buyers, alongside concerns among some consumers about the transition to E20 petrol.
The report notes that CNG registrations have already overtaken petrol in states including Gujarat, Haryana, Maharashtra and Rajasthan, illustrating how regional fuel preferences are evolving.
Electric Two-Wheeler Penetration Crosses 10% for the First Time
India’s two-wheeler market maintained its growth trajectory, with domestic wholesale volumes rising 15.1% year-on-year to 6.4 million units.
Retail demand was even stronger, increasing 26.9%, while eight of the nine two-wheeler segments recorded positive growth.
Scooters emerged as a major contributor, recording 27.4% growth to approximately 2.6 million units. Their market share increased by four percentage points to 41.3%, reflecting demand from urban commuters, delivery services and previously under-penetrated markets.
Motorcycles continued to account for the majority of two-wheeler volumes, with approximately 3.6 million units sold, although their growth was slower at 7.4%.
Electric two-wheelers achieved a significant milestone as registrations surged 88.9% year-on-year to approximately 589,000 units.
Their share of total two-wheeler registrations reached 11.1%, up from 9.1% in Q1 FY2027, marking the first time electric models accounted for more than one in ten registered two-wheelers during a quarter.
Premiumisation was another prominent trend. Premium scooter sales jumped 81.8%, while entry-level and executive motorcycles collectively lost 4.8 percentage points of market share.
The report also identified a tax-related divide in motorcycle demand. Under GST 2.0, motorcycles with engine capacities up to 350cc benefited from an 18% tax rate, while larger motorcycles faced a 40% rate. Super-premium and luxury motorcycles consequently recorded a 37.8% decline in volumes.
Commercial Vehicle Sales Jump 28.8% as Freight Demand Strengthens
India’s commercial vehicle industry registered a broad-based recovery, with domestic wholesale volumes increasing 28.8% year-on-year to approximately 300,000 units.
The improvement was supported by infrastructure development, construction activity, freight movement, e-commerce logistics and fleet replacement.
Goods light commercial vehicles posted particularly strong growth of 51.8%, while heavy commercial goods vehicles expanded 41.8%.
Passenger commercial vehicles also rebounded, recording 33.2% growth compared with just 3.2% in the previous quarter.
The recovery reflected demand for last-mile transportation, intercity travel and buses, including government procurement.
Commercial vehicle retail sales increased 25.2% year-on-year, indicating that the recovery extended beyond factory dispatches.
Electrification continued advancing, albeit from a smaller base than in passenger cars or two-wheelers.
Electric commercial vehicle registrations increased 215.8% year-on-year to approximately 19,000 units, taking EV penetration to 4.4% from 2.7% in Q1 FY2027.
Passenger commercial vehicles led the transition, with electric models accounting for 5.8% of registrations, compared with 3.7% among goods carriers.
Dealer Inventories and Rising Costs Present Challenges
Despite strong wholesale growth, Deloitte highlighted several factors that could influence the industry’s momentum.
Passenger vehicle dealer inventories increased from approximately 33–35 days at the end of July to 43–45 days by the end of September, around twice the recommended level of 21 days.
The accumulation reflected increased stocking ahead of the festive season, but also created pressure on dealerships to convert inventory into retail sales.
Meanwhile, commodity costs remained uneven. Copper, steel and rubber prices increased, while plastics became cheaper. Crude oil prices declined over the six-month period examined but rebounded over the preceding three months.
Vehicle financing nevertheless remained resilient, helping sustain demand despite broader inflationary pressures.
Deloitte’s consumer research also suggested a more nuanced electric mobility outlook. Although actual EV registrations continued climbing, the proportion of surveyed consumers considering an electric or hybrid vehicle for their next purchase showed signs of moderation.
The distinction suggests that growing adoption does not necessarily translate into an uninterrupted increase in consumer enthusiasm.
New Emission Rules and EV Policies Could Reshape the Industry
Beyond sales performance, the Wheelwatch tracker examined regulatory developments that could influence India’s automotive industry over the coming years.
The report highlighted draft Bharat Stage VII emission requirements, proposed for phased implementation across vehicle categories between 2029 and 2035.
These provisions would introduce tighter standards covering exhaust emissions, brake particles, tyre abrasion, battery durability and vehicle monitoring systems.
Deloitte also reviewed Corporate Average Fuel Efficiency (CAFE III) norms covering passenger vehicles from April 1, 2027, to March 31, 2032, with progressively tighter fleet-level efficiency targets and incentives for electric and hybrid powertrains.
Government initiatives, including PM E-DRIVE, production-linked incentives and state-level EV policies, are expected to remain important to the development of charging infrastructure, domestic manufacturing and electric mobility adoption.
The report further noted that automotive exports continued to outpace imports, supported particularly by strong two-wheeler export performance and favourable currency movements.
A Strong Quarter, but the Next Phase Will Test Sustainability
India’s automotive sector entered the second half of FY2027 with considerable momentum, although the underlying market is becoming increasingly complex.
SUVs are strengthening their position in passenger vehicles, scooters are gaining ground against motorcycles, and electric and CNG powertrains are steadily changing the industry’s fuel mix.
At the same time, rising dealer inventories, uneven input costs and stricter environmental requirements mean that strong sales growth alone will not guarantee sustained profitability.
The findings of Deloitte India’s sixth Wheelwatch tracker point to an industry moving beyond a straightforward recovery in volumes towards a broader structural transformation. For manufacturers, the challenge will be to match changing consumer preferences with affordability, efficient inventory management and cleaner technologies. India’s automotive market is accelerating, but maintaining that pace will require more than simply pressing the accelerator.
