SUV Fever: Utility Vehicles Now Nearly 70% of India's Passenger Car Sales
SUVs and utility vehicles now make up nearly 70% of passenger vehicle sales in India, driving massive growth in the auto sector.
The Indian automotive landscape is witnessing a massive shift in consumer preference as utility vehicles sold in India continue to dominate the market. According to a recent report by JM Financial, nearly seven out of every ten passenger vehicles sold during the year-to-date period of FY2026-27 belong to the utility vehicle (UV) segment, firmly establishing SUVs as the primary engine of growth for the industry.
Explosive Growth in Passenger Vehicles
The passenger vehicle (PV) market has shown robust momentum, with volumes surging by 22 per cent year-on-year in September 2026. Looking at the broader picture, the growth for the period between April and September 2026 stood at an impressive 28 per cent.
While cars have not been left behind—recording a 23 per cent growth during the year-to-date period—they are being significantly outperformed by utility vehicles. UV volumes skyrocketed by 31 per cent in the same timeframe, pushing their total share of the passenger vehicle market to approximately 68 per cent.
The September Surge
The data from September 2026 further underscores this trend. During this month alone:
- Domestic PV volumes rose by 22 per cent YoY.
- Cars grew by 14 per cent.
- Utility vehicles registered a much stronger growth of 26 per cent.
Consequently, the UV mix in total passenger vehicle volumes climbed to roughly 69 per cent in September 2026, up from about 67 per cent in September 2025.
Two-Wheelers and Commercial Vehicles: A Mixed Bag
The report also shed light on other segments of the transport industry, revealing a nuanced demand pattern in the two-wheeler market. Domestic internal combustion engine (ICE) two-wheeler volumes grew by 11 per cent in September 2026, with a year-to-date growth of 13 per cent.
Interestingly, scooters are winning the race over motorcycles. ICE scooter volumes rose by 19 per cent year-to-date, while motorcycles grew by 10 per cent. Within the motorcycle category, the trend is leaning toward power; models above 150cc are driving growth, whereas entry-level motorcycles are seeing a dip in demand due to recent price hikes.
The commercial vehicle sector is also riding a wave of positivity. Domestic volumes jumped 29 per cent year-on-year in the second quarter of FY2026-27, with overall year-to-date growth reaching 24 per cent, supported by healthy demand across various segments.
Challenges and the Road Ahead
Despite the celebratory sales figures, the industry faces significant headwinds. JM Financial flagged rising input costs as a primary concern for automakers. The report noted that renewed conflicts in West Asia have kept cost pressures elevated, which could potentially stifle margin expansion for manufacturers in the short term.
Festive Season and Inventory
As India enters the festive season, a critical observation was made regarding stock levels. Most original equipment manufacturers (OEMs) currently hold less than one month of channel inventory. This lean inventory strategy could lead to two outcomes:
- Minimal inventory remaining after the festive rush.
- A potential surge in stronger dispatches during the fourth quarter of FY2026-27 to replenish stocks.
While the brokerage expects demand to remain strong throughout the second half of the financial year, it anticipates that the current aggressive growth rates may begin to moderate.