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India's automobile sector is set to grow strongly in 2026 after record sales in 2025. Industry experts estimate that passenger vehicle sales may increase by 6-8% in the new year. Increasing demand from urban areas, improving rural economy and easy financing have increased the purchasing power of customers. The ever increasing popularity of SUVs, increase in demand for CNG and electric vehicles are further accelerating the growth of the market.

Government policies will provide huge benefits

According to experts, the direct impact of steps like GST relief, easy loans and income tax exemption will be visible on the auto sector. The new policies may increase sales of entry-level vehicles, which were under pressure for some time due to rising costs. Apart from this, the government's focus on e-vehicle policy and charging infrastructure will further strengthen the EV market.

Rising costs and new regulations challenge

However, everything is not easy for the auto sector. Companies' costs may increase due to stricter emissions and CAFE standards to be implemented from 2027. In the two-wheeler sector, due to mandatory features like ABS and CBS, prices of cheap bikes are increasing, which may affect the budget segment. Along with this, import duty, fall of rupee and uncertainty of global supply chain will remain a challenge for the auto industry.

Balanced journey of electric and traditional vehicles

Auto companies are working on a two-pronged strategy. On one hand, investment in EV and charging infrastructure is increasing, while on the other hand, improvements in petrol-diesel vehicles are continuing. This means that the demand for conventional vehicles will not end anytime soon and the shift towards EVs will happen gradually.

Perspective of big companies in the sector

Companies like Maruti Suzuki, Tata Motors, Mahindra, Honda and Toyota have given positive projections for the next year. EV, CNG and SUV segments can show the maximum growth. Growth is also expected in luxury vehicles, although import costs remain a matter of concern.