India Auto Sector Update Feb 2026: Strong Demand Across Segments

Automobiles Sector Update: Strong Demand Momentum Sustained Across Segments

India’s automobile industry continued to witness robust demand momentum in February 2026, with most segments delivering strong year-on-year (YoY) wholesale growth. Backed by healthy retail traction, improving affordability, rural resilience, and export strength, the sector maintained positive traction despite select supply-side and inventory adjustments.

Aggregate wholesale growth for February stood at impressive levels: Passenger Vehicles (PVs) grew 13.5%, Two-Wheelers (2Ws) surged 35%, Commercial Vehicles (CVs) expanded 28%, and Tractors rose 30% YoY. While performance across segments was largely encouraging, there were pockets of underperformance relative to expectations.

Below is a segment-wise analysis of February’s performance and the outlook ahead.

Passenger Vehicles (PVs): Retail Strength with Select Supply Constraints

Retail demand in the PV segment remained strong, supported by improved affordability and sustained consumer confidence. Registration data indicated healthy traction across most manufacturers, although wholesale dispatches varied depending on supply conditions.

Key Highlights:

• Maruti Suzuki India Limited (MSIL) recorded 7.3% YoY growth, reaching approximately 214,000 units. However, volumes fell short of expectations due to ongoing supply constraints.
  • Retail sales rose sharply by 28% YoY.
  • Exports surged nearly 57% YoY.
  • Domestic sales remained flat.
  • Production stood at 223,000 units in February, slightly lower than January levels.
• Hyundai Motor India Limited (HMIL) posted around 13% YoY growth to 66,000 units.
  • Domestic volumes grew 10%.
  • Exports rose 25% YoY.
• Tata Motors Passenger Vehicles Limited (TMPV) reported strong 35% YoY growth to 63,300 units but slightly missed internal projections due to an 11% month-on-month decline in dispatches.
• Mahindra & Mahindra Limited (M&M) delivered 19% YoY growth in its utility vehicle (UV) segment, selling around 60,000 units, in line with expectations.

Overall, the four listed PV players posted 13.5% YoY growth in February and 8.9% YoY growth on a year-to-date (YTD) basis. Export momentum and strong UV demand remain primary growth drivers.

Two-Wheelers (2Ws): Broad-Based Outperformance

The two-wheeler segment delivered one of the strongest performances in February, reflecting improved rural demand, export recovery, and inventory normalization.

Segment Performance:

• TVS Motor Company (TVS) posted 31% YoY growth to 529,000 units, slightly exceeding expectations.
  • Motorcycles grew 25%.
  • Scooters expanded 34%.
  • Three-wheelers jumped 77%.
  • Exports rose 26.6% YoY.
• Hero MotoCorp Limited (HMCL) reported 44% YoY growth to 558,000 units, benefiting from a favorable base effect.
  • Retail sales increased 18%.
  • Scooter sales surged 64%.
  • Exports climbed 34%.
• Royal Enfield (RE) underperformed peers, registering 11% YoY growth to 101,000 units.
  • Domestic sales rose 13%.
  • Exports declined 2%.

Excluding pending data from Bajaj Auto, the three major players collectively posted a strong 35% YoY wholesale growth in February. Rural recovery, product refreshes, and export normalization continue to support momentum.

Commercial Vehicles (CVs): Momentum Sustained

The CV segment maintained healthy growth, supported by infrastructure activity, improving freight demand, and rising fleet utilization.

Key Performers:

• Tata Motors Limited (TMCV division) reported 32% YoY growth to 42,900 units.
  • Heavy Commercial Vehicles (HCVs) grew 34.9%.
  • Light Commercial Vehicles (LCVs) increased 29%.
• VE Commercial Vehicles Limited (VECV) posted 23.4% YoY growth to approximately 10,000 units.

On a YTD basis, these two players delivered 13.7% volume growth. Rising freight rates, better fleet owner profitability, and strong infrastructure spending are likely to sustain demand in the coming months.

Tractors: Strong but Slightly Below Expectations

The tractor segment continued its strong FY26 trajectory, driven by favorable rural indicators such as higher reservoir levels, improved crop realization, and supportive Minimum Support Prices (MSPs).

February Performance:

• Mahindra & Mahindra posted 34% YoY growth in tractor volumes to 34,100 units, slightly below estimates.
• Escorts Kubota Limited (Escorts) recorded 20% YoY growth, also below projections.

Combined tractor volumes grew 30% YoY in February and 22% YoY on a YTD basis. While growth rates moderated relative to expectations, rural demand fundamentals remain robust.

Industry Outlook: Lean Inventories and Lower Discounts Ahead

Demand momentum across India’s auto ecosystem remains firm. With retail strength translating into wholesale recovery, inventory levels at OEMs are expected to stay lean despite fourth-quarter dispatch pushes.

As demand improves and supply constraints ease, discounting intensity is likely to moderate gradually. Improved product mix, strong export traction, and operating leverage could support margin expansion in the coming quarters.

Preferred Picks in the Sector:

• Maruti Suzuki: Strong export momentum and new launches position it well for earnings growth.
• TVS Motor Company: Consistent execution and segment diversification support premium valuation.
• Mahindra & Mahindra: UV leadership and tractor upcycle provide dual growth engines.

In the auto ancillary space, select companies are also well placed to benefit from volume growth and premiumization trends.

February 2026 reaffirmed the resilience of India’s automobile sector. While certain OEMs faced supply bottlenecks or marginal estimate misses, overall industry momentum remained intact across PVs, 2Ws, CVs, and tractors.

Export growth, rural recovery, infrastructure push, and strong retail trends collectively underpin a constructive outlook. With inventory normalization underway and discounting likely to ease, the sector appears poised for sustained performance in the upcoming quarters.