India's auto sector expects sustained demand in June 2026, with two-wheelers and passenger vehicles projected to achieve double-digit YoY retail growth. This is despite cautious rural demand, price hikes, and a slight MoM dip for two-wheelers.
The automobile sector is expected to see sustained demand momentum in June 2026, with two-wheelers and passenger vehicles likely to post healthy double-digit retail growth on YoY, as per a report by Yes Securities Institutional Equities.
Two-Wheeler Segment Performance
The report said two-wheeler retail sales are expected to grow over 15 per cent year-on-year, supported by a favourable base. However, on a month-on-month basis, sales may see a mild decline of 2-3 per cent due to the impact of Adhik Maas-related purchase delays.
It noted that retail sentiment across key regions remains stable, though slightly below March-April levels. Rural demand, however, remains cautious due to adverse weather conditions, higher fuel costs and recent price increases, which are impacting entry-level purchases. It noted, "underlying traction remained intact especially in >125cc category both in ICE scooter and motorcycle segments."
Passenger Vehicle (PV) Growth
Likewise, passenger vehicle (PV) will likely grow in healthy double digits supported by a sharp post-Adhik Maas rebound and strong traction from new launches, according to channel checks. The report noted improved footfalls across regions, with South India reporting healthy double-digit growth, while West and North India recorded high single-digit to early double-digit growth.
Industry-wide price hikes of 0.5-1.5 per cent were implemented across major OEMs in June 2026, marking the second increase in Q1 FY27, as companies passed on rising input costs.
Strong Demand for Electric Vehicles
Electric vehicle (EV) demand remained strong month-on-month, driven by fuel cost concerns and new launches, with inquiries and bookings rising 15-20 per cent, the report said.
Tractor Segment Outlook
Meanwhile, for the tractor segment, retails remained stable in June 2026, with volumes expected to stay strong in Q1 FY27, growing 23-24 per cent year-on-year, but likely to moderate later in the year.
The outlook is influenced by "steep price hike of Rs12-12.5k/unit implemented in Apr'26 and a further hike of similar amount expected by Aug-Sep'26. 2) Low subsidy linked volumes as one-time subsidies available from state of Maharashtra (30-35k units) and Punjab (12-13k) which aided volumes in FY26, will no longer be available in FY27," the report said. (ANI)
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