India’s automotive industry is expected to stay on a growth path over the next two fiscal years, but the momentum will not be uniform across segments. A new research report by Nuvama projects stronger expansion for passenger vehicles and two-wheelers, while heavy commercial vehicles and tractors are likely to grow at a slower pace.
Demand stays firm
“We reckon the wholesales uptrend shall sustain in May-26, led by better affordability, new products, seasonal wedding demand and ample financing availability. Moreover, export growth is likely to remain positive for most OEMs despite some pressure on shipments to the Middle East,” the report stated.
The outlook points to a market that is being supported more by domestic demand than by external factors. While export performance remains mixed for some brands, the overall trend appears stable enough to keep industry momentum intact in the near term.
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Passenger vehicles lead the rise
Passenger vehicles are expected to post one of the strongest gains in May 2026. Nuvama projects domestic PV volumes to rise by more than 20 per cent year-on-year, with some manufacturers likely to outperform the wider market. The report said discounts increased sequentially for Maruti Suzuki India Limited and Hyundai, stayed unchanged for Mahindra & Mahindra and declined for Tata Motors Passenger Vehicles.
“We estimate total volume growth would be 35 per cent YoY for TMPV (to 56,700 units), 25 per cent for MSIL (to 225,000 units), 15 per cent for MM-Auto (to 97,000 units) and 7 per cent for Hyundai (to 63,000 units). Hyundai’s exports are likely to be temporarily affected by high exposure to the Middle-East region (over 40 per cent of exports),” the report said.
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Two-wheelers and tractors support the market
The two-wheeler segment is also expected to deliver strong growth in May 2026, with domestic volumes projected to rise by over 10 per cent year-on-year. A low base, marriage-season demand and better affordability are expected to support sales. Export demand for mass-market brands is likely to remain healthy, especially in Africa and Latin America.
“For May-26 wholesales, we estimate total volume growth shall be 18 per cent YoY for TVSL (to 510,000 units), 16 per cent for EIM-RE (to 104,000 units), 16 per cent for BJAUT (to 445,000 units) and 12 per cent for HMCL (to 570,000 units),” the report added.
Tractor volumes are also expected to extend their uptrend, with domestic growth of more than 15 per cent in May 2026, supported by rural liquidity. However, fuel inflation linked to the West-Asia conflict has made terms of trade less favourable.
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Commercial vehicles lose pace
The commercial vehicle segment is expected to grow, but at a slower pace than in the second half of fiscal 2026. Fuel prices and freight uncertainties are weighing on the outlook. “We estimate total volumes shall increase 17 per cent YoY for TMCV (to 33,000 units), 11 per cent for EIM-VECV (to 8,200 units) and 5 per cent for AL (to 16,200 units).”
Looking further ahead, Nuvama expects the industry to remain on a growth path through FY26-28E, with passenger vehicles and two-wheelers outpacing heavier vehicle categories.
(With inputs from ANI)
