(MENAFN- IANS) New Delhi, Oct 30 (IANS) India's automobile sector experienced a robust recovery in September, with sales increasing by 5 to 10 per cent across various segments, a report said on Thursday.

The pickup in sales was driven by Goods and Services Tax (GST) reforms and the onset of the festive season, signalling a positive turn for the industry in FY2026, the report from ratings agency ICRA said.

The commercial vehicle (CV) segment witnessed a robust 11.9 per cent year-on-year growth in wholesale volumes.

While infrastructure projects and revived logistics supported a 3.2 per cent growth in H1 FY26, retail sales in specific segments like Medium and Heavy Commercial Vehicles (M&HCVs) contracted temporarily as fleet owners had deferred purchases in anticipation of the tax reform.

Retail sales of two-wheelers grew 6.5 per cent YoY during the month, after muted sales in the first few weeks due to purchase deferrals.

Wholesale volumes also grew 6 per cent as manufacturers increased dispatches, the report noted.

The passenger vehicle (PV) segment gained notable traction post-GST cut, with retail sales growing 5.8 per cent YoY and wholesale volumes up 4.5 per cent, ICRA said.

Wholesale volumes saw a 15.7 per cent sequential increase as OEMs stocked dealerships for the festive period. Although inventory levels were elevated, utility vehicles continued to dominate sales, it said.

ICRA maintained a stable to positive outlook for the Indian auto sector in FY2026. For the fiscal year, the ratings agency forecasted a modest 3-5 per cent wholesale growth for the CV industry, 6-9 per cent growth for two-wheelers and 1 to 4 per cent growth for passenger vehicles.

Improved affordability, new model launches, an increase in rural demand and sustained festive demand will act as growth drivers, the report said.

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