India Auto Industry Shows Steady Growth Led by Two-Wheelers and Commercial Vehicles
Emkay report highlights strong retail momentum and divergent tractor sales amid festive season timing shifts.
Quick Look
- India's auto industry exhibits steady growth driven by two-wheelers and commercial vehicles, while tractor volumes decline.
- Emkay report notes strong retail momentum, though year-on-year comparisons are affected by festive season timing.
AI-generated summary
Why It Matters
India's auto industry performance is evaluated through segments including two-wheelers, commercial vehicles, passenger vehicles, and tractors.
New Delhi: India's two-wheeler and commercial vehicle segments are expected to outperform passenger vehicles amid strong demand, supported by better pricing flexibility even as commodity cost pressures rise and new passenger vehicle launches remain limited in FY27 as per a report by Emkay.
The report noted that India's auto industry, excluding tractors, recorded steady growth, with select original equipment manufacturers (OEMs) outperforming across segments. Commercial vehicle (CV) and passenger vehicle (PV) growth remained broad-based, while retail momentum remained strong across segments.
"Growth for CVs and PVs remained broad-based. Retail momentum also sustained across segments," it said.
Two-wheeler (2W) retail sales maintained strong momentum, rising 33 per cent year-on-year, compared with 22 per cent in H2FY26, 29 per cent in July and 21 per cent in August 2026, the report noted.
Likewise, passenger vehicle (PV) sales also recorded strong growth across original equipment manufacturers (OEMs), led by Maruti Suzuki India Limited (MSIL), which posted 30 per cent year-on-year growth in domestic sales.
Similarly, medium and heavy commercial vehicle (MHCV) retail sales maintained strong momentum, rising 50 per cent year-on-year, compared with 30 per cent in July and 29 per cent in August 2026. Tractor volumes, however, declined across manufacturers, with Escorts and Mahindra & Mahindra (M&M) reporting year-on-year falls of about 17 per cent and 21 per cent, respectively.
At the same time, Emkay noted in its report, while overall vehicle volumes remained healthy, year-on-year growth appeared softer due to the timing of the festive season, with Diwali falling in November 2026 compared with October 2025, and a high September 2025 base following purchase deferments in August after the Goods and Services Tax (GST) cut.
"Amid strong momentum in underlying demand, we favor 2W and CV OEMs over PVs, given a similar demand trajectory but better pricing flexibility amid commodity pressures and a limited new-PV-model launch pipeline in FY27," it said.
What to Watch
AI outlook — possibilities, not facts
Two-wheeler and commercial vehicle OEMs will outperform passenger vehicles in FY27.
Likely · Within months
Open Questions
- How will commodity cost pressures impact full-year margins?
- Will tractor demand recover in subsequent quarters?
