India's automotive sector is poised to maintain its growth trajectory in 2026 despite facing rising operational costs, according to industry analysts. The stability comes as government policy measures continue to support the industry's expansion following a record-breaking performance in 2025. Passenger vehicle demand has shown remarkable resilience, with SUVs leading the segment's recovery while alternative fuel options including CNG and electric vehicles steadily gain market share. This trend signals a gradual but significant shift in powertrain preferences among Indian consumers. Industry experts attribute this sustained growth to a combination of factors including favorable financing conditions, new model launches, and increasing rural demand. However, manufacturers continue to navigate challenges related to input cost inflation and supply chain adjustments. The policy environment remains supportive, with recent government initiatives focused on promoting electric mobility and strengthening domestic manufacturing capabilities.

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