Automobiles Update : Cautiously Optimistic amid Geopolitical Tensions by PL Capital
Quick Pointers
* PVs see strong growth in both domestic and export market
* Growth in 2Ws driven by scooters, EVs and exports
Auto dispatches in May’26 saw sustained volume growth across most segments, although some sub-segments saw moderation. PVs reported growth in 20s, while 2Ws saw stable growth as most OEMs are in the midst of increasing capacities to meet the sustained retail demand while mitigating labor shortages, and disruptions in logistics and supply chain. CV industry reported mixed performance with subdued growth seen for MHCVs, while LCVs continued strong momentum. CV industry is expected to see short-to-medium term moderation due to elevated fuel/ RM prices, although OEMs are optimistic about the structural long-term growth drivers, which are replacement demand and infra spending. Tractors continued on a strong growth trajectory with adequate reservoir levels and resilient rural demand. However, progression of monsoon and input cost inflation will be key monitorables.
OEM-wise highlights
Mahindra & Mahindra: Decent domestic SUV growth constrained by labor shortages at Tier 2 suppliers. Strong growth across all other sub-segments with cautious outlook on the CV industry Overall group sales grew +20.7% YoY to 152.5k units. Total auto division sales grew +20.0% (excl. T&B) to 99.6k units; domestic UVs, +10.7% YoY (58.0k units); and LCVs, +18.6% (24.1k units). 3Ws continued their strong growth trajectory (+88.9% YoY) to reach 12.5k units. Auto exports grew by 37.1% YoY. Farm equipment volumes increased by +22.3% YoY to 49.7k units (domestic: +23.0%, exports: +7.0%), despite the high base. Total T&B division sales (CV > 3.5T, incl. SML) grew +18.4% YoY to 3.1k units driven by the passenger T&B segment.
Maruti Suzuki: Highest-ever monthly sales with strong growth across the portfolio. Exports continue to be robust. Management expects entry-level segment momentum to continue. FY27 exports to be in line with FY26 Overall, 242.7k units sold (+34.8% YoY). Total domestic sales (excl. sales to other OEMs) increased +40.0% YoY (190.3k units); exports grew to 41.9k units (+34.3% YoY). Domestic passenger cars increased to 97.8k units (+42.3%), and UVs, +44.4% YoY (79.3k units). LCVs (super carry) increased by 17.2% to 3.2k units. SUVs accounted for 41.6% (130bps YoY, +15bps MoM) of total domestic PV sales. Export penetration stood at 17.3% of the overall portfolio (-10bps YoY, +55bps MoM). Overall production volumes for May’26 indicate strong growth in mini and SUV segments.
Tata Motors PV: Strong domestic sales (incl. EVs) continue. PV sales grew +42.2% YoY to 59.8k units. Domestic sales rose +42.2% to 59.1k units, while exports surged by +44.9% YoY. Total EV sales reached 10.5k units (+85.0% YoY, +14.9% MoM) with 17.6% penetration (+410ps YoY, +225bps MoM).
Hyundai Motor India: Modest domestic growth, albeit slower than industry; exports decline for the 3rd consecutive month Overall volumes increased +4.1% YoY to 61.1k units. Domestic sales increased +9.1% (47.8k units). Exports (which is the management’s focus) de-grew by -10.4% YoY (21.8% penetration).
Bajaj Auto: Decent growth led by 150cc+ motorcycles, EVs and exports Overall sales grew +19.9% YoY to 461.3k units. 2W volumes rose +18.3% YoY to 393.2k units: domestic volumes grew +9.5% (209.5k units) and exports grew +30.3% YoY (183.7k units). CV volumes grew healthy +30.2% YoY to 68.1k units with domestic growth at +12.2% YoY.
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