The road ahead looks brighter for autos
India’s automotive sector is poised for another year of strong growth, with two-wheelers and passenger vehicles expected to lead the recovery in FY27, according to
India’s automotive sector is poised for another year of strong growth, with two-wheelers and passenger vehicles expected to lead the recovery in FY27, according to a research report by ICICI Direct.Industry players are guiding for 8-10% volume growth in the two-wheeler and passenger vehicle segments, as demand gains momentum across categories and macroeconomic tailwinds strengthen.Also Read: Race is On! India set to put 5 million cars on the road soon"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 said."GST 2.0 tailwinds continue to drive underlying demand," it added.Retail activity has also kept pace with wholesale dispatches. Vehicle registrations on the Vahan platform stood at around 24 lakh units in August 2026, up 16% from 20.7 lakh units in the same month last year.Among two-wheeler makers, Bajaj Auto emerged as the strongest performer, with volumes rising 30% year-on-year.
Exports jumped 53%, while domestic volumes increased around 10%.TVS Motor recorded a roughly 20.5% increase in volumes to 5.9 lakh units, helped by 29% growth in exports. Eicher Motors' Royal Enfield division reported an 11% rise in volumes to approximately 1.26 lakh units.Passenger vehicle makers also posted strong numbers.Tata Motors' passenger vehicle business led the broader peer group, with volumes rising 56% year-on-year to around 68,000 units, albeit on a low base. Its electric vehicle volumes surged 94% to 16,549 units.Maruti Suzuki reported volumes of around 2.16 lakh units, up 21%, while Mahindra & Mahindra recorded a 50% increase to approximately 59,000 units. Hyundai's volumes rose 9% to around 66,000 units despite logistical constraints affecting outbound shipments.Also Read: India’s passenger vehicle sales jump 35% to 4.5 lakh in August as Maruti, M&M drive growthCommercial vehicle makers also delivered strong August numbers, led by medium and heavy commercial vehicles, with early signs of a revival in passenger buses.Tata Motors' commercial vehicle business posted a 49% increase in dispatches to around 44,000 units.
Ashok Leyland volumes rose 38% to roughly 21,000 units, while VECV recorded an 18% increase to approximately 8,400 units."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 said.The tractor segment was more moderate. Escorts Kubota led growth with a 19% increase in volumes to around 10,000 units, while Mahindra & Mahindra's tractor volumes
rose 5% to roughly 29,500 units.ICICI Direct expects the tractor industry to expand at a moderate single-digit pace in FY27, constrained by a high base from FY26 and expectations of a below-normal monsoon at 90% of the long-period average.Overall, the research firm expects two-wheelers and passenger vehicles to remain the key engines of India's automotive growth in FY27, supported by improving demand, policy tailwinds and a gradual recovery in domestic economic activity.
The BriefWire