20.10% Growth, Bigger Loans Mark A Shift In India’s Vehicle Finance Market, Says Report

A Five-Year Growth Story

India's vehicle finance market has expanded significantly over the past five years, with the overall portfolio growing at a compounded annualised growth rate (CAGR) of 20.10 per cent between June 2021 and June 2026, according to a report by CRIF High Mark titled Wheels and Ambition: A Research Report on India's Vehicle Finance Landscape. The report, covered by CNBC TV18 and Outlook Money, shows that vehicle finance accounted for 11.40 per cent of the overall retail credit portfolio in June 2026, the same share as in June 2021.

The growth is attributed to higher loan sizes and increased lending volumes. Originations across vehicle finance rose 17.10 per cent year-on-year in the first quarter of FY27. The composition of the portfolio has also shifted: the share of auto loans in retail credit fell to 5.50 per cent from 5.90 per cent, while commercial vehicle, two-wheeler, and used-car loans gained share.

Used-Car Loans Lead the Pack

Used-car loans recorded the fastest growth among all vehicle-finance segments, with a CAGR of 26.20 per cent between June 2021 and June 2026, as reported by both CNBC TV18 and Outlook Money. The borrower base in this segment grew 2.40 times during the five-year period. Notably, 75 per cent of used-car originations in Q1 FY27 went to new-to-product borrowers, indicating a growing reliance on formal financing for pre-owned car purchases.

Two-Wheelers: A Gateway for First-Time Borrowers

Two-wheeler loans continue to play a critical role in bringing first-time borrowers into the formal credit system. The borrower base increased from around 2.3 crore (23 million) in June 2021 to 3.6 crore (36 million) in June 2026, according to the report. About 80 per cent of two-wheeler borrowers were new-to-product customers. The segment achieved a CAGR of 19.70 per cent. The report also notes that the share of two-wheeler loans exceeding Rs 1 lakh rose to 43 per cent of originations in Q1 FY27, up from 38 per cent in Q1 FY25, as reported by Outlook Money.

Bigger Auto Loans

The auto-loan market is witnessing a shift towards larger ticket sizes. The average ticket size for new auto loans reached Rs 8.60 lakh in Q1 FY27, with loans above Rs 15 lakh comprising 29.80 per cent of originations, up from 27.60 per cent in Q1 FY25, according to both outlets. Average exposure per borrower has also increased, growing at a five-year CAGR of 9.2 per cent, as reported by CNBC TV18.

Commercial Vehicle (CV): Growth with Elevated Delinquency

The commercial vehicle segment grew at a CAGR of 20.10 per cent, with lending in the Rs 5-10 lakh range rising to 30.50 per cent of originations in Q1 FY27 from 22.40 per cent in Q1 FY25, as reported by Outlook Money. However, this segment also presents higher risk: CNBC TV18 reported that the commercial vehicle segment recorded comparatively higher early-stage delinquencies, with portfolio-at-risk (PAR) 31-90 standing at 4.10 per cent in June 2026, according to Outlook Money. The proportion of CV borrowers with two or more active loans rose from 15.70 per cent in June 2021 to 19.90 per cent in June 2026.

The report highlights a divergence in asset quality across segments. While later-stage delinquencies improved across categories, auto loans recorded the strongest asset quality among segments covered, as per CNBC TV18. The report also flagged a concern: borrowers aged 30 or below had a PAR 91-180 delinquency rate of 1% in June 2026, compared to 0.60% or lower among older age groups, a figure single-sourced by Outlook Money.

Regional and Growth Outlook

The report also provided geographic insights, noting that BT100 geographies accounted for 53 per cent of two-wheeler loans and 45 per cent of commercial vehicle loans, as reported by CNBC TV18. This suggests expansion beyond major metros, though the report does not specify lacunae.

Overall, the CRIF High Mark report paints a picture of a dynamic vehicle finance market that has grown strongly, with distinct trends in lending mix and composition. While the growth is impressive, the report flags potential vulnerabilities, such as rising debt per borrower as area requiring closer checks by lenders, as Outlook Money reported.