OEM growth expected to be broad-based driven by festive demand and rural recovery: Report
New Delhi, August 4
Festive season demand, favourable rural tailwinds and improved production availability are expected to support volume growth across most original equipment manufacturers going forward, according to a sector research report released by Asit C. Mehta Investment Intermediates.
Dealer inventory levels remained relatively low across the automotive industry, which continued to support wholesale dispatches and channel replenishment. However, commodity price movements, geopolitical developments, and export market conditions remained key monitorables for the sector.
In addition, industry performance in the second half of FY27 expected to serve as a crucial watchpoint, as the high base moderated reported volume growth despite healthy underlying demand.
"The July volume performance reinforces our constructive outlook on the auto sector, with growth remaining broad-based across most segments. Demand continues to be supported by healthy consumer sentiment, improving rural fundamentals and sustained infrastructure activity, while easing supply-side constraints have enabled OEMs to better cater to underlying demand," the report said.
The report noted that July 2026 witnessed a strong month for the domestic auto industry, with demand remaining healthy across two-wheelers (2W), three-wheelers (3W), passenger vehicles (PV), commercial vehicles (CV), and tractors despite monsoon uncertainty.
Retail momentum continued to stay robust across most segments, while wholesale dispatches generally exceeded expectations on healthy demand and improving supply conditions.
Within the sector, 2Ws and PVs continue to be the key growth drivers, with strong traction across premium motorcycles, scooters, SUVs and EVs.
The report mentioned that in the 2W segment, TVS Motor grew 37.5 per cent year-on-year, Royal Enfield expanded 34.3 per cent, Bajaj Auto reported 31.2 per cent growth, while Hero MotoCorp grew 18.6 per cent.
Three-wheelers maintained a strong growth trajectory as Mahindra & Mahindra (M&M) grew 53.4 per cent year-on-year, followed by TVS Motor at 51.1 per cent, Atul Auto at 39.9 per cent, and Bajaj Auto at 23.2 per cent.
In the PV segment, Tata Motors posted 58.7 per cent growth, Maruti Suzuki grew 33.7 per cent, Hyundai rebounded 25.4 per cent after earlier supply disruptions, and M&M grew 20.4 per cent.
As per the report, CVs saw Tata Motors expand 36.9 per cent and Ashok Leyland grow 30 per cent. In tractors, M&M grew 19.9 per cent and Escorts Kubota rose 22 per cent, benefiting from improving monsoon conditions, higher reservoir levels, and healthy kharif sowing.
— ANI
Reader Comments
The 58.7% growth for Tata Motors in PVs is impressive! 🚗 With new SUV launches and EV push, Maruti and Tata are clearly dominating. But I wonder how long this will last with rising commodity prices. The second half of FY27 might be a reality check.
Interesting report. As someone who follows emerging markets, India's auto sector seems resilient despite global headwinds. The 2W growth, especially premium motorcycles at Royal Enfield's 34.3%, shows a rising aspirational middle class. Let's see if exports pick up too.
Dealer inventory levels being low is a good sign — less discount pressure and healthier margins. But I wish the government would do more on road infrastructure in smaller towns. Even if rural demand is recovering, bad roads and lack of service centers are still issues for buyers.
Happy to see the EV segment mentioned in the report! But I feel the growth is mostly in 2W EVs like Ola and Ather. Passenger EV adoption is still slow due to charging infrastructure. The 58.7% growth from Tata Motors might be mainly from ICE models. We need more affordable EVs for the masses.
The tractor growth story is a clear indicator of a robust kharif season. With reservoir levels up and good sowing, the rural economy is set to do well. But let's not forget — this is also an election year in some states, so government spending on rural schemes might be adding to the demand. Either way, good times for auto stocks! 📈
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