India's automotive industry is set for sustained growth over the next two fiscal years, according to a Nuvama report. Passenger vehicles and two-wheelers are expected to lead this growth, outpacing commercial vehicles and tractors.
India's automotive sector is set for sustained growth trajectories over the next two fiscal years, with passenger vehicles and two-wheelers expected to outpace heavy commercial vehicles and tractors. According to a research report by Nuvama, the domestic automobile industry will witness a divergence in growth momentum across different segments.
"Over FY26-28E, we forecast a domestic industry volume CAGR of 8% for PVs, 6% for 2Ws, 2% for MHCVs and 1% for tractors," the report said. The near-term outlook for May 2026 indicates a broad-based sustaining of the wholesale uptrend, driven primarily by domestic demand factors. "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.
Passenger Vehicle Projections
In the passenger vehicle segment, domestic volumes are projected to expand by over 20 per cent year-on-year in May 2026. The report noted that discounts trended higher on a sequential basis for Maruti Suzuki India Limited and Hyundai, while remaining flat for Mahindra & Mahindra and reducing for Tata Motors Passenger Vehicles. "We estimate total volume growth would be 35% YoY for TMPV (to 56,700 units), 25% for MSIL (to 225,000 units), 15% for MM-Auto (to 97,000 units) and 7% 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% of exports)," the report said.
Two-Wheeler Market Momentum
The two-wheeler industry is expected to see a strong double-digit expansion of over 10 per cent year-on-year in the domestic market for May 2026, supported by a low base, marriage season demand, and affordability. Mass-market manufacturers are anticipated to post positive export growth, led by demand in Africa and Latin America. "For May-26 wholesales, we estimate total volume growth shall be 18% YoY for TVSL (to 510,000 units), 16% for EIM-RE (to 104,000 units), 16% for BJAUT (to 445,000 units) and 12% for HMCL (to 570,000 units)," the report added.
Tractor and Commercial Vehicle Outlook
Tractor industry volumes are also projected to continue their uptrend in May 2026 with over 15 per cent year-on-year domestic growth, aided by rural liquidity. However, fuel inflation led by the West-Asia conflict has turned terms of trade adverse.
For the commercial vehicle segment, growth is anticipated to moderate compared to the second half of fiscal 2026 due to fuel prices and freight uncertainties, adding, "We estimate total volumes shall increase 17% YoY for TMCV (to 33,000 units), 11% for EIM-VECV (to 8,200 units) and 5% for AL (to 16,200 units)." (ANI)
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