2-wheelers, passenger vehicles to lead auto sector growth in FY27E

Two-wheelers and passenger vehicles are expected to see 8-10% volume growth in FY27E, says an ICICI Direct report. This comes after strong double-digit YoY growth in August 2026 across most OEMs, driven by improving demand and policy drivers.

For FY27E, Two-wheelers (2Ws) and passenger vehicles (PV) space is expected to outperform, with industry players guiding for positive 8-10 per cent volume growth. The projection comes on the back of broad-based sales acceleration across segments, according to a research report released by ICICI Direct.

The report noted that wholesale dispatches maintained strong traction through the latest monthly cycle, aided by macro policy drivers and improving underlying demand conditions. "India's automotive OEMs posted healthy volume prints for August 2026 with volumes growing double digit on YoY basis across vehicle categories and OEMs," the ICICI Direct report stated. "GST 2.0 tailwinds continue to drive underlying demand," the report added, highlighting that retail activity mirrored the wholesale trend, as Vahan registrations for August 2026 totalled approximately 24 lakh units, up 16 per cent year-on-year from 20.7 lakh units registered in August 2025.

Segment-Wise Performance

Two-Wheeler Domain

In the two-wheeler domain, Bajaj Auto outperformed the segment after posting a 30 per cent year-on-year expansion, supported primarily by a 53 per cent surge in exports while domestic volumes grew around 10 per cent. TVS Motor registered an increase of roughly 20.5 per cent at 5.9 lakh units with 29 per cent export growth, while Eicher Motors' Royal Enfield division reported an 11 per cent rise at approximately 1.26 lakh units.

Passenger Vehicles

Across passenger vehicles, Tata Motors PV outperformed the broader peer group with an overall growth of 56 per cent year-on-year to around 68,000 units on a low base, alongside electric vehicle volumes of 16,549 units that marked a 94 per cent increase. Maruti Suzuki posted volumes of around 2.16 lakh units, representing a 21 per cent rise. Mahindra & Mahindra recorded a 50 per cent jump to approximately 59,000 units, while Hyundai volumes stood at roughly 66,000 units, up 9 per cent amid logistical constraints on outbound shipments.

Commercial Vehicles

Commercial vehicles also delivered solid prints, led by medium and heavy commercial trucks alongside initial signs of revival in passenger buses. Tata Motors CV led the segment with dispatches rising 49 per cent to around 44,000 units. Ashok Leyland registered a 38 per cent increase to roughly 21,000 units, and VECV rose 18 per cent to approximately 8,400 units.

Tractor Segment

In the tractor segment, Escorts Kubota led the growth charge with a 19 per cent rise to around 10,000 units, while Mahindra & Mahindra recorded an increase of 5 per cent at roughly 29,500 units.

Industry Outlook

"Industry outlook is cautiously optimistic in the near term with underlying growth levers of revival in domestic capex cycle & ageing fleet (driving replacement demand)," the report noted.

The report observed that the tractor industry faces moderate single-digit expansion in FY27E due to the high base of FY26 and forecasts of a below-normal monsoon at 90 per cent of the long-period average. (ANI)

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