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The automobile sector delivered a healthy performance in Q4FY26, supported by a resilient retail demand, premiumisation trends, improving rural sentiment and continued traction in EV adoption. In Q4FY26, industry retail sales grew 23.3% YoY, led by a strong growth in Passenger Vehicles (+20.3% YoY), Two-wheelers (+25.0% YoY) and Commercial Vehicles (+19.5% YoY), reflecting a broad-based growth across segments.

The quarter witnessed continued a momentum in premium motorcycles, SUVs, hybrids and electric vehicles, with OEMs reporting a healthy demand for higher-end products despite inflationary pressure. EV penetration continued to improve across vehicle categories, supported by expanding product portfolios, localisation initiatives and charging infrastructure investment. The auto ancillary sector also maintained a strong growth momentum, supported by rising content per vehicle, localisation opportunities, export expansion and increasing EV-related business.

Looking ahead, we expect the industry to enter FY27E with a cautious outlook amid rising commodity prices, elevated freight cost, fuel price volatility and geopolitical uncertainty due to West Asia crisis. These factors could exert near-term pressure on consumer affordability and margin. Nevertheless, we believe structural growth drivers remain firmly intact, including premiumisation, electrification, replacement demand and continued infrastructure spending.

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