Automobiles & Components Sector Update : Eyes on GST cuts and potential demand uplift by Kotak
Eyes on GST cuts and potential demand uplift.
The auto sector reported a mixed set of wholesale numbers, with the PV segment reporting a decline due to inventory correction and the CV segment momentum remaining muted on a lower base; tractors continued their strong momentum and the domestic 2W growth was driven by channel filling. All domestic PV OEMs (MSIL, MM, TTMT and HMIL) reported 7-11% yoy decline in domestic wholesales, whereas TVS and EIM continued their outperformance. Retail trends were muted on an overall basis, as customers deferred their purchases to take advantage of potential GST cuts. The export segment remained strong across 2Ws, PVs and CVs.
Domestic wholesale PV volumes declined on a yoy basis in August 2025
According to our estimates, domestic PV industry wholesale volumes were down by mid-to-high single digits on a yoy basis, driven by muted retail trends and inventory correction amid anticipation of GST rate cuts. Retail PV volumes increased by low single digits yoy in August 2025. MSIL’s volumes declined by 1% yoy, led by 8% yoy decline in the domestic segment and 41% yoy growth in exports. According to our estimates, MSIL’s wholesale market share stood at ~40% (flat yoy). TTMT volumes declined 7% yoy, whereas M&M’s PV volumes fell 9% yoy. HMIL reported 11% yoy decline in domestic volumes in August 2025.
Domestic 2W wholesales grew by low teens yoy in August 2025
Domestic 2W wholesale volumes grew by low teens, driven by continued momentum in the scooter segment, recovery in the motorcycle segment and channel filling in anticipation of GST rate cuts. Retail volumes increased by 2% yoy and EV 2W retail sales increased by 17% yoy in August 2025 on account of a low base. HMCL’s volumes increased 8% yoy, whereas TVSL 2W volumes grew 30% yoy, driven by 28% yoy growth in domestic volumes and 36% yoy growth in export volumes. Royal Enfield volumes grew 55% yoy, led by 39% yoy growth in exports and 57% yoy growth in the domestic segment. Bajaj Auto reported 5% yoy growth in August 2025.
CV segment volumes witnessed mid-to-high single-digit growth in August 2025
Domestic CV segment wholesale volumes saw a mid-to-high single-digit increase yoy, partly on account of a favorable base. Retail volumes saw 5% yoy increase in August 2025. TTMT domestic CV volumes increased by 6% yoy, led by (1) 5% yoy increase in HCV truck segments, (2) 15% increase in ILMCV truck segment and (3) 5% yoy increase in passenger carriers. AL reported 5% yoy increase in volumes, whereas VECV’s volumes increased by 10% yoy in August.
Domestic tractor segment demand remains strong, led by normal monsoon
According to our estimates, domestic tractor volumes increased by >20% yoy in August 2025, driven by (1) the advancement of an above-normal monsoon for kharif sowing and better reservoir levels, (2) an early festive season and (3) favorable terms of trade for the farmers. M&M tractor volumes grew by 28% yoy, whereas Escorts Kubota’s tractor volumes grew by 27% yoy in August 2025.
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