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All key segments post volume decline in Q1

TVS outperforms in 2Ws; MM and Toyota in PVs; VECV in CVs

* Key auto segments continued to face demand weakness in Q1FY26: PVs recorded a 1.4% decline, while 2W ICE posted an 8% decline in volumes. Additionally, CVs witnessed a marginal decline.

* In the 2W segment, HMCL regained the No. 1 spot, as HMSI underperformed in its core scooters segment.

* Within the motorcycles category, all segments except for >250cc posted a YoY decline in Q1.

* In motorcycles, two key trends that stood out in Q1 were: 1) HMSI significantly outperformed peers in the 125cc segment, and 2) TVS has emerged as the market leader in the 150-250cc segment.

* In PVs, UV’s contribution increased to 66% in Q1. MM, Toyota, and Kia outperformed in the PV segment.

* In the CV segment, while MHCV goods declined 4.5%, LCV goods marginally declined 0.5% for Q1FY26. Bus continued to witness steady demand, with MHCV buses growing 7.6% and LCV buses growing 8.8%.

* While TTMT underperformed in all four CV segments, VECV outperformed in most of the CV segments in Q1.

* The FY26 outlook across most auto segments remains in the low- to mid-single digit mark. There is a downside risk to our 2W growth estimates if demand fails to pick up in the coming quarters. Our top picks in auto OEMs are MSIL and MM.

ICE 2Ws: Two-wheelers post decline after seven quarters

* Two-wheeler domestic (ICE) sales declined 8% YoY, marking the first decline after seven quarters.

* Meanwhile, motorcycle sales recorded a 9% YoY decline, scooter ICE sales recorded a 5% decline, and mopeds recorded an 11% YoY decline.

* The only player to have gained share in 2W ICE is TVS, marking a 290bp increase to 18.9%.

* Although both HMSI and HMCL lost about 170bp share each in Q1, HMCL regained its position as the No. 1 two-wheeler OEM in domestic ICE 2Ws.

Segmental trends: Motorcycles down 9% and scooters down 5% in Q1

Motorcycle segment:

* Domestic motorcycle sales declined 9% YoY for Q1.

* Outperformers included RE (+12%) and TVS (+3%).

* On the other hand, while both HMCL and BJAUT saw ~13% YoY decline each, HMSI sales posted a 5% YoY decline in Q1.

* As a result, HMCL lost ~200bp share to 41.8% and BJAUT lost 80bp share to 16%.

* Meanwhile, TVS gained 130bp share YoY to 11.3% and RE gained 150bp share to 7.9%.

100cc segment:

* The 100cc segment continued to underperform the motorcycle industry in Q1, posting a 13% YoY decline in volumes.

* HMCL further strengthened its position in this segment, achieving its highestever market share of 83.5% (+410bp YoY).

* HMSI and BJAUT lost market share, declining 350bp to 3.8% and 110bp to 7.2%, respectively.

* HMSI was the worst hit, with volumes witnessing a sharp 55% YoY decline, impacted by the discontinuation of its Dream series and a sharp 43% YoY decline in Shine 100cc volumes in Q1.

125cc segment:

* The segment posted a 6% YoY decline in volumes in Q1.

* HMSI was the only player to post double-digit volume growth in this segment, recording an 11.5% YoY growth in Q1.

* The biggest underperformer was HMCL, posting a 39% YoY decline. All its models saw a decline in Q1 – Glamour was down 77% YoY (as it prepares for a refresh), Super Splendor was down 29%, and Xtreme 125R was down 7%.

* Overall, HMCL lost a significant 710bp share in this segment, reaching 12.8%. This loss was largely to HMSI, which gained 780bp share in Q1 to 50.3%, recovering most of its lost market share in the segment over the years.

* The sales of BJAUT’s CNG bike, Freedom, dropped to a monthly run rate of just 1.7k units (peak of 30k units in Oct’25).

150-250cc segment:

* The 150-250cc segment underperformed the motorcycle industry, posting a 12.5% YoY decline in volumes in Q1.

* The key outperformer in this segment was TVS, which posted a 19% YoY growth, while most other key players witnessed a double-digit decline.

* TVS is now the market leader in this segment, gaining 840bp share to 31.6%. Both Apache and Ronin are performing well for TVS.

* BJAUT has slipped to the second spot, losing 200bp share to 30%. Yamaha India also lost 480bp share to 15.5%

* HMCL’s Karizma sold just 88 units in Q1, while its Xtreme160R sold just 2,599 units.

>250cc segment:

* This segment has been a key growth driver of the industry in the recent past. It posted a 10% YoY growth in Q1.

* Key outperformers were BJAUT (+30%) and RE (+12%). RE’s growth was primarily driven by the strong demand for Bullet 350, which posted a 58% YoY growth in Q1. However, Guerrilla has yet to gain traction, with Himalayan + Guerrilla volumes declining compared to just Himalayan volumes last year.

* Triumph, in partnership with BJAUT, is witnessing a steady pick-up in volumes, posting a 50% YoY growth to 9,685 units in Q1.

* On the other hand, HD X440 sales slumped to 1,845 units, while HMCL’s Maverick managed to sell just 9 units during the quarter.

* HMSI is currently selling around 3.8k units per month in this segment.

ICE scooters segment

* The ICE scooters segment declined 5% YoY in Q1.

* TVS significantly outperformed peers, posting 20.5% YoY growth, while Suzuki also performed well with ~11% YoY growth.

* On the other hand, market leader HMSI posted a 19.5% YoY volume decline. HMCL volumes were also down 11% YoY.

* TVS gained a substantial 600bp share in scooters, reaching 27.9% in Q1 – its highest ever in this segment. The key growth driver was the newly launched Jupiter 110, which is witnessing strong demand, recording 37% YoY growth. However, Ntorq sales declined 16% YoY in Q1.

* Suzuki gained 270bp share to 18.7%. Its flagship model Access posted a steady 7.5% growth YoY, while Burgman was the key growth driver, recording 21% YoY growth.

* On the other hand, HMSI lost 780bp share to 43.9% in Q1.

* HMCL continued to underperform, with its share declining 30bp to 4.6%.

PV update: UV mix now stands at 66%

* In Q1FY26, the PV segment posted a 1% YoY decline in volumes.

* The cars segment declined 11% YoY, while UV growth slowed down to 4% YoY. As a result, the UV mix in PVs inched up to 66% in Q1FY26 (from 65% in FY25).

* M&M (+22%), Kia (+10%), and Toyota (+18%) outperformed the PV segment in Q1.

* On the other hand, MSIL (-6%), Hyundai (-11.5%), and TTMT (-10%) underperformed during the quarter.

* As a result, MM gained 290bp market share to 15%; Toyota gained 130bp to 7.9%, and Kia gained 70bp market share to 6.6%.

* In contrast, MSIL lost 195bp, reaching 38.9%, while Hyundai/TTMT lost around 150bp/120bp share.

Car segment:

* The car segment posted an 11% YoY decline in Q1, with all players witnessing a decline in volumes.

* Within cars, the small car segment saw a significant decline in volumes: Alto (- 36%), Spresso (-38%), and Celerio (-43%).

* MSIL maintained its market share at 65.5% for Q1.

UV segment:

* The UV segment’s growth slowed down to just 4% YoY in Q1.

* Outperformers included MM (+22%), Kia (+10%), and Toyota (+24%).

* On the other hand, MSIL (-1%), Hyundai (-10%), and TTMT (-9%) underperformed the segment during the quarter.

* MM gained 350bp share, reaching 22.7% in Q1. Toyota gained 170bp share, reaching 10% (regaining a double-digit market share after FY19).

* Key growth drivers for MM in Q1FY26 were Thar (+77% YoY), led by strong demand for the Roxx variant; XUV 700 (+14% YoY); and its new EVs (sold 11k units in the first quarter and 4k units in Jun’25). For MM, Scorpio (+4.5%) and XUV 3XO (-3%) growth slowed down in Q1.

* MSIL lost 110bp share to 24.2%, Hyundai lost 210bp share to 13.5%, and TTMT lost 200bp share to 13.6%.

* For MSIL, a key setback during Q1FY26 was the 29% YoY decline in Grand Vitara volumes to 19k units, likely due to anticipation around an upcoming launch in a similar segment. The model is also facing increased competition from Toyota’s Urban Cruiser Hyryder (+72% YoY), which surpassed GV’s sales marginally in Q1.

* For TTMT, its Punch saw a sharp dip in volumes, declining 36% YoY in Q1. TTMT’s Curvv clocked 8,272 units in Q1.

* Hyundai’s best-selling Creta saw just 2.7% YoY growth in Q1, despite the launch of its EV variant.

* Growth for Kia was primarily driven by the new Carens, which sold 17.7k units in Q1.

* Skoda Kylaq also received a good response, currently averaging ~4.5k units per month.

CV update – Marginal decline in Q1FY25

* Domestic CVs posted a marginal (0.4%) decline YoY in Q1FY26.

* However, while the bus segment posted 8% YoY growth, the goods segment posted 2% YoY decline, with MHCV goods declining 4.5% YoY during the quarter.

* TTMT was the biggest underperformer in CVs in Q1, losing almost 360bp share to 33%. The company lost share in each of the four CV sub-segments to competition during the quarter.

MHCV goods:

* The segment posted a 4.5% YoY decline in Q1FY26.

* In this segment, TTMT lost ~160bp share to 49%, largely to VECV, which gained 140bp share to 17.4%.

* AL also gained about 40bp share to 30.4% in Q1

LCV goods:

* This segment posted a 0.5% YoY decline in volumes in Q1.

* TTMT was the only player to witness a double-digit decline (14.7%) in volumes in Q1. As a result, the company lost almost 440bp share in this segment, reaching 26.4%.

* On the other hand, MM gained 240bp share to 51%.

* The gap between TTMT and MM further widened, with MM selling almost 2x of TTMT’s volumes in Q1.

Bus segment:

* In the passenger segment, the MHCV category posted a 7.6% YoY growth, whereas LCV Bus volumes grew 8.8% in Q1FY25.

* In the MHCV Bus segment, TTMT was the worst hit, losing 410bp share to 29%. AL also lost 170bp share to 31.6%.

* Gainers in this segment were VECV (+210bp to 27%) and SML Isuzu (+110bp to 9.8%).

* In the LCV passenger segment, TTMT lost 150bp share to 25.5%.

* On the other hand, market leader Force Motors gained a 600bp share to 47.5%.

Valuation and view

* The outlook for most auto segments remains in the low- to mid-single digit mark for FY26.

* Demand across 2Ws and PVs remained weak in the first quarter of the fiscal year, with the 2W industry substantially lagging behind industry growth expectations of 6-7% for FY26. Hence, there is a downside risk to our 2W growth estimates if demand fails to pick up in the coming quarters.

* MSIL is our top pick, given its continued export momentum and an expected revival in the domestic UV share following its anticipated launch. We like MM for its healthy demand momentum in both SUVs and tractors for FY26.

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