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Strong >20% festive demand spike likely, following GST cuts

We hosted a large West India-based dealer of MSIL PVs, HMSI 2Ws, and TTMT CVs, for deeper insight into the likely festive demand trend following the GST cut, dealer readiness to meet the demand surge, response to MSIL’s new Victoris SUV launch, and impact on EV demand after the GST cut for ICE vehicles (also refer to GST 2.0: Kick-starting auto demand; M&M key beneficiary). KTAs from today’s expert call: 1) After 1.5-2Y of subdued growth, the tide is turning for PVs, with 10% YoY retail growth in Aug-25 (in the dealer’s region), 15-20% YoY growth in bookings across segments in Sep-25MTD (despite festive mismatch); volume growth for Oct-Dec ’25/FY26 is pegged at >20%/high single digit. 2) MSIL, in a targeted attempt to revive the small car segment, has announced strategic price cuts in starting variants for entry-level hatchbacks; current consumer/discount schemes to continue till Sep-25 end, over and above the price cuts. 3) Initial response for the recently-launched Victoris SUV has been positive with deliveries slated to commence from Oct-25. 4) E-2W demand momentum is expected to sustain despite price gap reduction vs ICE (on GST cut), as customers are willing to pay a premium for differentiated offerings; E2W prices are declining, amid a widening range of product offerings and improving cost curves. 5) Trucks are witnessing value growth higher than volume growth, amid fleet operators shifting toward higher tonnage vehicles to drive revenue / improve utilization; SCVs/buses continue to see strong traction (including in EVs), on the back of robust demand trends.

GST/price cuts turning the tide for PVs; high single-digit growth seen in FY26

After nearly 18-24 months of slowdown, the industry has entered a positive trajectory, with Aug-25 Vahan registrations up 10% YoY in the dealer’s regions. Festive sentiment has further lifted momentum, with enquiry levels up 15-20% YoY across segments in Sep-25 (despite the festive mismatch). PV volumes are expected to grow >20% YoY over Oct-Dec ’25, aided by i) improved pricing clarity for models following the GST cuts, and ii) upcoming festive, after the relatively-subdued 5MFY26; volume growth for FY26 is expected to be in a high single digit. To help revive the small-car segment, MSIL has undertaken strategic and targeted price reductions in the starting variants for entry hatchbacks with models like S-Presso seeing cuts of up to Rs0.12mn. Additionally, current consumer/discount schemes to continue till Sep-25 end, over and above the price reductions, with revised prices also extended to bookings placed prior to 22-Sep-25. Some near-term volume impact is anticipated in Brezza/Grand Vitara due to the launch of Victoris, rather than GST slab changes. Initial response for Victoris has been positive; dispatches have begun in Sep-25, with deliveries slated to start in Oct-25, and volumes expected to range at 5-7k units/mth. With ample network inventory in place, dealers are well prepared for the upcoming festive season.

2Ws: EVs to sustain growth led by new product launches/price rationalization

Growth over Oct-Dec ’25 is seen outpacing that of PVs. Entry of larger players such as Suzuki and HMSI into the EV space will be instrumental in sustaining momentum and expanding the category. Despite the narrowing price gap between ICE 2Ws and E-2Ws, EV demand is unlikely to slow down. Consumers are increasingly willing to pay a premium for differentiated EV offerings, while improving cost curves, declining product prices, and a broader industry product portfolio continue to strengthen category growth.

CVs: Value-led growth in trucks; EV momentum picking up pace in SCVs/Buses

The combined effect of lower EMIs (driven by the recent rate cuts), reduced marginmoney requirements, and vehicle price corrections is expected to support a cyclical recovery in CV demand. EV adoption momentum is strongest in SCVs (eg TTMT’s Ace Pro EV is gaining strong traction) as well as buses (several state/city transport undertakings plan fleet upgrades/transition to EVs). With subsidy and pricing uncertainties gradually settling, the outlook for these segments is becoming more constructive. Overall truck volumes remain subdued, though the segment is seeing a structural shift toward highercapacity vehicles (eg 55-tonners), enabling fleet operators to generate higher revenue from the same fleet base by carrying greater loads and improving asset utilization.

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