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Auto Sector Poised for Strong Growth Despite Export Challenges: Nuvama

A Nuvama Institutional Equities report maintains a constructive outlook on India's automobile sector, projecting healthy sales growth through FY26-28. The momentum is driven by positive customer sentiment, better affordability, new products, and adequate finance availability. While domestic volumes across two-wheelers, passenger vehicles, commercial vehicles, and tractors are expected to see strong double-digit growth, exports face temporary headwinds, particularly for OEMs with high exposure to the Middle East. The report provides specific volume growth estimates for major companies like Maruti Suzuki, Tata Motors, and Hero MotoCorp for March 2026.

Key Points: India Auto Sector Growth Outlook FY26-28 Despite Headwinds

  • Double-digit domestic volume growth expected
  • Positive customer sentiment drives momentum
  • Middle East exports a temporary headwind
  • Growth across 2-wheelers, PVs, CVs, and tractors
2 min read

Auto sector set for strong growth despite export headwinds: Nuvama

Nuvama report forecasts strong domestic growth for 2-wheelers, PVs, CVs, and tractors in FY26-28, despite Middle East export issues.

"We maintain our constructive view on the automobile sector with healthy sales growth prospects for FY26-28E - Nuvama Report"

New Delhi, April 1

India's export growth shall remain positive for most OEMs despite a hit on Middle East exports and container availability issues, as per a report by Nuvama Institutional Equities.

"We maintain our constructive view on the automobile sector with healthy sales growth prospects for FY26-28E," the report said.

The wholesale uptrend is expected to continue in Mar-26 despite production constraints. This momentum is largely driven by enduring positive customer sentiments spurred by "better affordability, new products and adequate finance availability."

The two-wheeler industry is expected to witness domestic volumes growing in double digits, with a projected increase of over 15 per cent year-on-year. For March 2026 wholesales, the report estimates total volume growth of "25% for TVS Motor to 520,000 units and 19% for Bajaj Auto to 440,000 units."

Meanwhile, Hero MotoCorp is anticipated to grow by 9 per cent to 600,000 units and Eicher-RE to see an 8 per cent rise to 109,000 units.

In the passenger vehicle segment, volumes are likely to rise in double digits during March 2026, supported by improved affordability and new product launches. "Discounts have trended lower on a sequential basis for most OEMs."

The report estimated total volume growth to be 22 per cent for Tata Motors PV to 63,800 units and 18 per cent for Mahindra & Mahindra Auto to 99,000 units. Maruti Suzuki is expected to expand by 11 per cent to 215,000 units, while Hyundai may see a marginal 1 per cent increase to 68,000 units. "Hyundai exports shall be temporarily affected by high exposure to the Middle East region (over 40 per cent of exports)," the report noted.

Commercial vehicle industry volumes are anticipated to grow in double digits, specifically over 10 per cent in the domestic market, owing to the "positive impact of GST cuts, improved freight availability and adequate financing availability."

Nuvama estimated the total volumes to increase 15 per cent for Eicher-VECV to 13,900 units, 14 per cent for Ashok Leyland to 27,500 units, and 13 per cent for Tata Motors CV to 46,500 units.

Similarly, tractor industry volumes are also expected to continue an uptrend in Mar-26, largely due to "better affordability in the wake of GST rate cuts and state subsidies."

Total volumes for M&M Farm and Escorts are estimated to be expanded by 12 per cent and 10 per cent, reaching 39,000 and 12,500 units, respectively.

- ANI

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Reader Comments

R
Rohit P
Good to see the positive outlook, but the report glosses over the Middle East export issue. Over 40% of Hyundai's exports going there is a significant vulnerability. We need to diversify our export markets more aggressively to avoid such shocks in the future.
A
Aman W
TVS Motor projecting 25% growth is fantastic! Shows how competitive our two-wheeler companies have become. The finance availability point is key - easier loans are putting vehicles within reach of many more families, especially in tier-2 and tier-3 cities.
S
Sarah B
Interesting analysis. The GST cuts seem to be having the intended effect across commercial vehicles and tractors. Improved freight availability is a great sign for the overall logistics and infrastructure health of the country. Growth seems broad-based.
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Vikram M
As a Mahindra SUV owner, I'm happy to see them doing well! But I hope this growth is sustainable and not just a bubble. The industry must also focus on the EV transition and building a robust charging infrastructure alongside these ICE vehicle numbers.
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Karthik V
The tractor numbers are a relief. After some tough years for farmers, better affordability from subsidies and GST cuts should help. A healthy farm sector is the backbone of everything. Jai Kisan! 🚜

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