The Indian automobile sector is expected to grow by 6-7 per cent in the fiscal year (FY26) amid damp consumer demand across most vehicle categories, according to a report by Motilal Oswal.
As per the report, volumes in the two-wheeler category fell the highest compared to passenger vehicles (PV) and commercial vehicles (CVs) in the first quarter of FY26 (Q1FY26).
The two-wheeler segment remained under pressure due to muted demand. In the April-June quarter of FY26, motorcycle sales fell by 9 per cent year-on-year, ICE scooter sales declined 5 per cent year-on-year, and moped volumes also slid by 11 per cent year-on-year.
By contrast, the PV category posted a 1.4 per cent decline in volumes, with the small car segment being impacted significantly due to the volumes of key models such as Maruti Alto, Spresso, and Celerio witnessing sharp year-on-year declines in Q1FY26.
The commercial vehicle (CV) segment, meanwhile, saw a marginal decline in volumes. While MHCV goods registered a 4.5 per cent dip, LCV goods fell by 0.5 per cent. However, bus sales remained a bright spot, with MHCV buses growing 7.6 per cent and LCV buses up 8.8 per cent.
In terms of OEMs’ performance, Tata Motors underperformed across all four CV sub-segments, while VE Commercial Vehicles (VECV) managed to outperform in most, according to Motilal Oswal.
‘Our focus would be to deliver industry-beating growth (in FY26) because one, this year is possibly the strongest product cycle for us, and the freshest portfolio. We have a low base for FY25. On the SUV side also, we will be coming with a multipowertrain on Harrier and Safari, including the petrol version,’ said Shailesh Chandra, MD, Tata Motors & Tata Passenger Electric Mobility, earlier at the Q4FY25 post-earnings conference call in May.
Chandra had said that there would be re-varianting and repositioning of certain products in the portfolio. ‘We have the full year for Nexon CNG and also, we will launch Sierra. So, even SUVs are going to be strong…it’s going to be a very strong year for us,’ he said.
The top Tata Motors executive had said that the company will strengthen its value proposition of its existing EV products, in terms of value-price equation. ‘It’s going to be a strong year for us on the EV side also,’ Chandra said.
Its homegrown rival, Mahindra & Mahindra, too, is confident of growth this year.
Nalinikant Gollagunta, CEO (automotive division) at Mahindra & Mahindra, said the company remains confident of mid-to-high teens growth in the SUV segment, along with strong double-digit export growth. He also reaffirmed guidance for high single-digit growth in LCVs for the full fiscal, according to a report by news agency ANI.
The brokerage said that the industry may remain in a cautious phase in the near term, with a rebound largely dependent on rural demand recovery, fuel price stability, and broader economic conditions.
