Daijiworld Media Network – New Delhi
New Delhi, Feb 26: India's automobile sector is set for a mixed performance in FY2026, with passenger vehicles (PVs) witnessing moderate growth, two-wheelers (2Ws) maintaining strong demand, and the tractor segment continuing its positive momentum, according to a report by Kotak Institutional Equities.
The domestic PV industry is expected to grow in low single digits year-on-year in FY2026, following a flat growth trend in FY2025. The report noted that wholesale volumes for the PV segment would be supported by steady demand for SUVs and increasing penetration of battery electric vehicles (BEVs). However, growth will be partially offset by weak demand in the entry-level segment and the high base effect from previous years. Experts estimate PV industry volumes to rise by 3-5 per cent, with SUVs/MUVs witnessing 6-8 per cent growth, while hatchbacks and sedans may see 3-4 per cent growth.
The two-wheeler segment is projected to grow by 6-9 per cent YoY in FY2026, driven by rising urbanization and a growing preference for premium motorcycles above 125cc. Scooters are also expected to see a surge in demand, further strengthening the segment’s outlook.
On the export front, the recovery trend continues, with strong demand from Latin America (LATAM) and improvements in the African market. This positive momentum in overseas markets is likely to support the overall growth of the two-wheeler segment.
The medium and heavy commercial vehicle (M&HCV) segment presents a mixed outlook. While some automakers expect mid-single-digit growth, auto ancillary players anticipate flat growth in FY2026. However, commercial vehicle manufacturers remain optimistic about sustaining profit margins due to disciplined pricing, increasing revenue from non-CV segments, and stable commodity prices.
Meanwhile, the tractor industry is expected to maintain its strong growth trajectory, supported by favourable agricultural conditions. Key factors driving this trend include higher Rabi sowing acreage, improved reservoir levels, and favourable Minimum Support Prices (MSP), strengthening farmers' purchasing power. OEMs anticipate this demand momentum to continue into the first half of FY2026.
The auto component industry’s growth remains closely linked to vehicle demand. While domestic markets remain stable, a slowdown in certain export regions could impact revenue growth for select auto ancillary players.