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State-wise demand trends in 2QFY26

Our analysis of state-wise 2QFY26 demand trends reflects that (1) muted demand trends in the PV segment, partly due to demand deferral on GST cuts; the southern region continued to underperform, (2) growth in the 2W segment, led by strong demand in the scooter segment and strong trends in the western region, (3) recovery in M&HCV demand—15% yoy rise in western India and (4) LCV demand grew 10%—it continued to decline in Assam.

Passenger vehicles: 1.5% yoy decline in volumes in 2QFY26

* Industry volumes declined 1.5% yoy in 2QFY26 due to muted demand trends in the SUV/MUV segment and demand deferral to take benefit of lower prices, owing to GST cuts. Volumes in the northern and southern regions declined 2-5% yoy in 2QFY26, while the volumes in western India grew 2% yoy. Volumes in most key states posted a muted trend, whereas states such as Gujarat, Rajasthan and Punjab witnessed a mid-single-digit yoy increase in volumes. Delhi, Karnataka, Andhra Pradesh and Telangana witnessed a 5-8% yoy volume decline in 2QFY26.

* MSIL lost a 160 bps yoy market share in 2QFY26 (excluding sales to Toyota), as it ceded market share in the southern states—Karnataka ((-)310 bps yoy), AP & Telangana ((-)80 bps yoy) and Tamil Nadu (-310 bps yoy). M&M/Toyota Motors gained 110/40 bps market share yoy in 2QFY26.

Two-wheelers: 7.7% yoy increase in volumes in 2QFY26

* Industry volumes grew 7.7% yoy in 2QFY26 due to channel filling, owing to the upcoming festive season and strong demand trends after September 22, owing to GST cuts. In terms of regions, the northern region volumes grew 9.4% yoy, whereas the western region volume grew 13% yoy. The eastern and southern regions grew low single digits yoy.

* The scooter mix in two-wheeler volumes rose 180 bps yoy in 2QFY26 due to a rise in the scooter mix in the West and South. The scooter mix rose to 52.6% (+130 bps yoy) in South India and increased 310 bps yoy in the western region.

* TVS Motor gained a 200 bps yoy market share, driven by strong demand for the scooter segment and Bajaj Auto lost a 150 bps yoy market share due to paused production, arising from the rare earth magnet issue affecting the EV segment and market share loss in the 125 cc motorcycle segment. Honda lost 220 bps yoy market share in 2QFY26. Royal Enfield volumes rose 42% yoy, driven by strong performance across regions, especially in the North and West.

M&HCVs/LCVs: +5.8%/+9.8% yoy change in volumes in 2QFY26

* CVs saw a steady growth overall, registering an 8.2% yoy volume growth in 2QFY26, with M&HCV volumes growing 5.8% yoy in 2QFY26, led by the western region witnessing 14.9% yoy growth. Tata Motors’ market share increased 150 bps yoy, whereas AL market share declined 60 bps yoy in 2QFY26.

* The LCV industry’s volumes increased 9.8% yoy, led by double-digit growth in the western and southern regions in 2QFY26. M&M gained 130 bps yoy market share, whereas Tata Motors lost 50 bps yoy market share in 2QFY26.

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