India's Auto Industry to Maintain Growth Momentum Until 2026

May 5, 2026

88 min

May 5, 2026 03:31

India's auto 'demand upcycle' to continue for next 2-3 quarters, growth to remain strong till CY26: Report

## Continued Growth in Auto Sector

India's automobile industry is set to experience sustained growth over the next two to three quarters, with strong performance expected to continue until 2026. This trend is driven by increased demand across various vehicle categories, including passenger vehicles, commercial vehicles, two-wheelers, tractors, and electric vehicles.

## Factors Supporting Growth

The growth is attributed to improved affordability due to GST adjustments, positive rural sentiment, and a shift towards premium vehicles. However, potential risks include geopolitical tensions, rising freight costs, and supply chain challenges, which could impact export volumes and profitability.

## Passenger Vehicles Surge

In April 2026, domestic wholesale volumes for passenger vehicles rose by approximately 20% compared to the previous year. Tata Motors and Maruti Suzuki led this growth with increases of 31% and 32%, respectively. Other companies like Mahindra & Mahindra and Hyundai Motor India also saw growth, albeit at a slower pace.

## Commercial Vehicles and Two-Wheelers

The commercial vehicle segment, excluding Ashok Leyland, grew by about 16%, supported by infrastructure projects and stable freight demand. Tata Motors excelled with a 28% increase, particularly in small commercial vehicles. Two-wheeler volumes, excluding Bajaj Auto, increased by around 30%, with Hero MotoCorp and Royal Enfield showing significant gains.

## Tractor and Three-Wheeler Markets

Tractor sales grew by 23%, driven by favorable agricultural conditions and government support. Mahindra & Mahindra and Escorts were among the top performers. The three-wheeler segment also saw substantial growth, with Mahindra & Mahindra and TVS reporting increases of 81% and 61%, respectively.

## Electric Vehicles on the Rise

Electric vehicle adoption continues to grow, with the electric passenger vehicle segment expanding by 74% year-on-year. Tata Motors, Mahindra & Mahindra, and Maruti Suzuki are key players in this market, holding significant shares.

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