India’s vehicle finance market is entering a phase of more segmented and diversified growth, with commercial vehicles and used cars emerging as key drivers, alongside a premiumisation trend in auto financing. CRIF High Mark’s latest research report, “Wheels and Ambition: A Research Report on India’s Vehicle Finance Landscape,” examines these evolving trends across auto, two-wheeler, commercial vehicle and used-car financing, highlighting shifts in borrower behaviour, originations and portfolio risk.
- Commercial vehicle loans are the clearest growth engine (20.1% 5‑Yr CAGR).
- Used‑car loans (26% 5‑Yr CAGR) are emerging as the fastest‑formalizing opportunity.
- Auto loans are showing signs of premium‑led recovery.
- Two‑wheelers continue to bring new borrowers into the system (80% new‑to‑product borrowers).
Key Highlights:
Commercial Vehicles and Used Cars Emerge as Key Growth Engines
Commercial vehicle loans recorded a 20.1% five-year CAGR between June 2021 and June 2026, while used-car loans emerged as the fastest-growing segment, recording a 26.2% CAGR during the same period. The used-car segment also saw its borrower base expand 2.4 times, highlighting its growing formalisation and emergence as a mainstream credit segment.
Two-Wheelers Continue to Drive Volume
Two-wheeler financing remains the largest borrower segment, with the borrower base increasing from approximately 2.3 crore in June 2021 to 3.6 crore in June 2026. The segment continues to bring new borrowers, with 80% of borrowers being new-to-product.
Premiumisation Gains Momentum in Auto Financing
Auto loans are showing signs of a premium-led recovery, with average exposure per borrower growing at a 9.2% CAGR between June 2021 and June 2026. The share of auto loans above ₹15 lakh increased from 27.6% in Q1 FY25 to 29.8% in Q1 FY27, pointing towards a shift towards higher-value vehicles.
Vehicle Loan Originations Grow 17.1% YoY
Overall vehicle-finance originations grew 17.1% YoY in Q1 FY27, supported by higher ticket sizes and continued volume growth across segments. Average auto-loan ticket size increased to ₹8.6 lakh, while used-car financing continued to attract new borrowers, with 75% of originations coming from new-to-product borrowers.
Asset Quality Shows Signs of Stabilisation
The overall risk environment is stabilizing, with later-stage delinquency improving across vehicle-finance segments. Auto loans recorded the strongest asset quality, while commercial vehicle loans continued to experience comparatively higher early-stage delinquency
Other risk implications: Average ticket sizes are rising, active loans per borrower are increasing in some segments (especially auto loans), and a growing multi‑loan borrower cohort among them suggests deeper lender relationships — but also highlights the need for tighter bureau‑level concentration checks. For instance, the share of borrowers with 2+ active loans in Commercial Vehicle Loans (CVL) rose from 15.7% to 19.9% between Jun’21 and Jun’26.
Vehicle Finance Evolves into a More Segmented Growth Market
The findings point to a shift in India’s vehicle-finance market from a predominantly volume-led opportunity towards a more segmented growth market. Commercial vehicles offer strong macro-driven growth potential, used cars are emerging as a scalable opportunity, while premium auto and two-wheeler financing are creating avenues for value-led growth.
Credit Growth Expands Beyond Major Urban Centres
Vehicle-finance originations are also seeing increasing penetration across BT100 geographies, indicating growing demand beyond major urban centres. Two-wheeler loans recorded a 53% BT100 share, while commercial vehicle loans stood at 45%, highlighting the expanding reach of vehicle finance into smaller cities and markets.
