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Auto OEM Dispatch – In July 2026, 2W sales showed solid growth; TVSL sales grew 38.0% YoY and EIM was up 34.3% YoY. The PV segment, driven by strong domestic demand from GST rate rationalisation and product launches, recorded robust growth in domestic sales, with MSIL up 33.7% YoY. The CV segment saw solid growth, with AL, EIM-VECV and M&M sales up by 30.0% / 15.8% / 31.7% YoY, respectively

Auto Retail Sales – The automotive industry posted a 25.8% YoY growth in retail sales for July 2026, supported by a low base in July 2025, steady consumer sentiment, recent model launches, softer interest rates, strong EV adoption and improved affordability following GST rationalisation.

CNG and EV Penetration – CNG penetration in the PV segment increased on a YoY basis amid a shift towards EVs. EV penetration across segments improved, though overall levels remained low, as adoption is constrained by infrastructure and range concerns

Inventory Analysis – Dealer inventory levels showed mixed trends across major vehicle segments in July 2026. Overall inventory trended lower during the month, led by MSIL, BJAUT, HMCL and EIM.

Auto OEM Dispatches:

* In July 2026, 2W OEMs recorded healthy growth, bolstered by strong domestic performance following the GST changes. TVSL and EIM led, with YoY dispatch growth of 38.0% and 34.3%, respectively, driven by demand for premium segments. BJAUT reported a 29.7% YoY increase in sales volumes, while HMCL reported a growth of 18.6% YoY.

* In July 2026, PV OEMs recorded robust sales growth. Among the top carmakers, TTMT and MSIL posted a strong YoY growth of 58.7% and 33.7%, respectively, driven by continued domestic demand momentum. M&M reported a 20.4% YoY increase in sales volumes, while Hyundai Motor India reported a growth of 25.4% YoY.

* The CV segment recorded healthy growth in July 2026, with, AL sales up 30.0% YoY, EIM-VECV was up 15.8% YoY, M&M increased 31.7% YoY and TTMT sales rose 36.9% YoY. The overall performance was aided by the strong demand in the MHCV and LCV segments, considering the ongoing replacement cycle demand. The tractor segment reported solid growth; M&M advanced 19.9% YoY, while Escorts registered YoY growth of 22.0%.

Auto Retail Sales:

Automobile Market Trend: Strong YoY performance The automotive industry posted 25.8% YoY growth in retail sales in July 2026, with all segments expanding YoY. 2W sales grew 28.2% YoY, aided by momentum in demand driven by the price rationalisation supported by the GST rate changes. PV sales rose 19.0% YoY, driven by strong domestic demand, SUV momentum and EV adoption. The CV segment recorded a 25.1% YoY growth, while 3W sales grew 16.2% YoY. The Tractor segment was up 28.4% YoY. Overall, the industry reported healthy growth in July 2026, supported by a low base in July 2025, steady consumer sentiment, recent model launches, softer interest rates, strong EV adoption and improved affordability following GST rationalisation. The outlook for subsequent months is positive supported by strong demand, lower base for July–September 2026 and the festival-led demand support in the second half of Q2FY27.

CNG and EV Adoption:

CNG penetration in 3Ws declined 225 bps YoY, to 21.2%. PVs recorded a 411 bps YoY increase to 24.8%, indicating a growing preference for cleaner fuels in the segment. The CV segment recorded an increase in penetration, with a 104 bps YoY growth to 13.6%. On the EV front, 2W penetration grew 393 bps YoY to 11.2%, while PV penetration increased by 325 bps to 8.0%, and CV EV penetration grew by 197 bps to 3.5%, though overall adoption remained low. The automotive industry is transitioning towards cleaner energy, especially in PVs, but EV uptake remains gradual amid concerns over charging infrastructure, range anxiety, battery life and performance.

Inventory Analysis: Assessing Dealer Inventory Level across Key Segments

For PVs, MSIL’s July 2026 dealer inventory was at lower levels below its one-year average (5 days). However, M&M’s average inventory level was higher than MSIL’s. Its current dealer inventory stands at 26 days, lower than its one-year average (37 days). In the 2W segment, inventory peaked during the July 2025–Sept 2025 period as dealers built up stock. For July 2026, the inventory level of 2W OEMs showed a mixed trend across OEMs. HMCL, BJAUT and EIM dealers are operating at a low inventory level, post strong vehicle sales in the Oct 2025–Jan 2026 period. In the CV segment, AL’s dealer inventory was at 27 days in July 2026. The company is currently operating at lower inventory level (1-year average 48). We believe companies with low current inventory levels, such as MSIL, HMCL, BJAUT and EIM, are likely to report strong dispatch volumes over the next few months

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