New Delhi [India], January 2 : India's automobile industry is expected to witness sustained momentum in 2026, with Axis Securities maintaining an optimistic outlook across two-wheelers (2W), three-wheelers (3W), passenger vehicles (PV), commercial vehicles (CV), and tractors, supported by demand recovery and policy-led tailwinds.
According to the report, "The overall industry outlook remains optimistic, with gradual demand recovery, a reduction in the GST rate, and income tax relief as key factors driving demand in FY26."
The two-wheeler segment recorded cumulative domestic sales growth of 10 per cent year-on-year (YoY) during Apr-Dec'26, while exports showed "improved traction across global markets." The report notes that "potential upside triggers for domestic demand include government-led consumption measures, a rural demand uptick, and new model launches."
The three-wheeler segment continued to outperform, with domestic wholesales rising 49 per cent YoY on a year-to-date basis. The report highlighted that the segment posted "strong growth of 80 per cent YoY" in December, underlining robust demand conditions.
Domestic PV volumes grew around 6 per cent YoY during Apr-Dec'26, led by strong performances from multiple OEMs. Looking ahead, the brokerage stated, "We remain cautiously positive and expect industry volumes to grow in high single digits," supported by "a reduction in GST rate and improving affordability for consumers."
The commercial vehicle segment posted a healthy 9 per cent YoY growth in domestic volumes on a YTD basis, reflecting improving freight demand. The report expects "high-single-digit industry growth in FY26 for CV players, driven by growing demand in the Bus segment."
The tractor segment continues to benefit from favourable agri fundamentals, with domestic sales rising 21 per cent YoY during the period. The report said volumes were supported by "favourable monsoons and high reservoir levels." Looking ahead, Axis Securities expects "the positive momentum to continue," driven by "GST reductions, enhanced reservoir levels, robust rabi sowing, and improved kharif harvest."
Overall, the report indicates that policy support, rural recovery and improving affordability are likely to keep the automobile sector on a steady growth path through 2026.
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