India's auto 'demand upcycle' to continue for next 2-3 quarters, growth to remain strong till CY26: Report

New Delhi: The ongoing demand upcycle in India's automobile industry is expected to continue for the next 2-3 quarters, with elevated growth likely to sustain through CY26 before gradually normalising in CY27, according to a report by Antique Stock Broking.

The report noted that the auto sector began FY27 on a strong footing, with broad-based volume growth across passenger vehicles (PVs), commercial vehicles (CVs), two-wheelers (2Ws), tractors, and electric vehicles (EVs). This growth has been supported by improving affordability following GST rationalisation, healthy rural sentiment, and ongoing premiumisation trends.

However, the report cautioned that escalating geopolitical tensions remain a key risk, particularly for export volumes and profitability in 1HFY27.

Higher freight costs, commodity inflation, and potential supply-chain disruptions are expected to remain key concerns.

It stated, "the ongoing demand upcycle to sustain over the next 2-3 quarters, with elevated industry growth likely through CY26".

Passenger vehicles up 20%

In the passenger vehicle segment, domestic wholesale volumes grew around 20% year-on-year in April 2026.

Tata Motors and Maruti Suzuki led the growth with 31% and 32% increases, respectively. Mahindra & Mahindra and Hyundai Motor India reported relatively moderate growth of 8% and 17%.

As per the report, Maruti's performance was driven by strong demand across utility vehicles, compact cars, and mini segments.

Toyota Kirloskar Motor also showed strong performance with 21% growth, while JSW MG Motor India and Kia India posted modest growth of 4% and 3%, respectively.

Commercial vehicles up 16%

In the commercial vehicle segment, domestic volumes (excluding Ashok Leyland) grew about 16% year-on-year, supported by infrastructure-led demand and steady freight activity.

Tata Motors outperformed with 28% growth, driven by strong demand in small commercial vehicle cargo and pickup segments, which grew around 40 per cent.

VE Commercial Vehicles and Mahindra & Mahindra's light commercial vehicle business reported steady growth of 9% and 7%, respectively.

VE Commercial Vehicles is a joint venture between Volvo Group and Eicher Motors Limited.

Two wheelers up 30%

In two-wheelers, volumes (excluding Bajaj Auto) rose around 30% year-on-year, led by strong growth in Hero MotoCorp at 85% and Royal Enfield at 37%.

TVS Motor Company reported 8% growth, supported by 36% growth in EV volumes, although motorcycle volumes declined 9 per cent due to supply-chain constraints. Export volumes grew 19 per cent, though performance varied across companies.

Tractors up 23%

Tractor sales also remained strong, with domestic volumes growing about 23%, supported by favourable farm sentiment, good reservoir levels, and government support.

Mahindra & Mahindra, Escorts, and VST Tillers reported growth of 21%, 28%, and 17 per cent, respectively.

Three-wheelers up 81%

In the three-wheeler segment, Mahindra & Mahindra and TVS reported strong growth of 81 per cent and 61 per cent, respectively.

Electric vehicle adoption continued to gain momentum. The electric passenger vehicle segment grew 74% year-on-year, with Tata Motors, Mahindra & Mahindra, and Maruti Suzuki holding market shares of 37%, 23%, and 5%, respectively.