Auto Wholesale Report May 2024: Key Highlights and Future Outlook

Update of the Auto Wholesale sector for the month of May

Auto industry enters 2026 with full throttle; CV cycle shifts gear

The overall landscape for auto OEMs remains encouraging, with the industry reporting 24.5% YoY / 14.3% MoM growth. Volume growth was underpinned by resilient underlying retail demand and disciplined inventory management across dealerships, which helped extend the post-GST cut and festive-season momentum into the new calendar year. Performance was broad-based across segments, though month-on-month growth moderated as festive-led demand normalised and discount intensity eased. Tractors emerged as the primary growth driver, registering strong double-digit expansion on both an annual and monthly basis. Looking ahead, monthly volume momentum is expected to moderate as temporary demand tailwinds fade, while potential price actions or higher costs associated with new model introductions could weigh on near-term growth. Annual growth, however, should remain supported by a favourable base.

On the EU–India trade deal, passenger vehicle import duties are proposed to be reduced from the current 70–110% level to ~10% over a 5–10 year period, with auto component tariffs expected to be phased out over a similar timeline. Given the predominantly CKD-based operating model of European OEMs in India, near-term pricing benefits are likely to remain limited, with more meaningful CBU-led price reductions emerging only over the medium term as tariff structures gradually normalise (initially towards ~40%). The extent of price pass-through remains uncertain, particularly considering currency volatility. Structurally, the agreement is expected to enhance product availability in the premium and luxury segments rather than materially alter demand dynamics in the mass market (sub-Rs. 30 lakh). Overall, the FTA is likely to support gradual premiumisation of the Indian auto market, with limited near-term impact on domestic OEMs and modest incremental benefits for auto ancillaries.

Passenger Vehicles

The Indian PV market sustained its healthy growth trajectory in January 2026, with domestic volumes rising 13.2% YoY and 10.2% MoM. With channel inventory levels remaining lean, wholesale volumes largely reflected underlying retail demand rather than incremental stock accumulation, a structurally positive indicator for demand sustainability. The month’s data continued to highlight the structural shift towards utility vehicles, with SUVs accounting for a significant share of top-selling models. Among PV OEMs, MSIL underperformed its peer set, with domestic volumes remaining largely flat on both an annual and monthly basis. The weaker performance in the entry-level segment appears to be supply-driven, reflecting capacity constraints and internal production prioritization toward higher-growth utility vehicle models, rather than a deterioration in demand conditions. Tata Motors Passenger Vehicles reported a strong performance during the month, supported by improved demand elasticity following GST rate cuts, incremental contribution from recent launches, and sustained traction in the compact SUV portfolio. This translated into domestic volume growth of 46.1% YoY and 40.3% MoM. Continued strength in Punch and Nexon, along with rising acceptance of Harrier, Safari and the recently launched Sierra, underpins a constructive outlook. For M&M, the demand environment remains supportive, with domestic wholesale volumes growing 25.4% YoY and 24.7% MoM, aided by sustained preference for utility vehicles.

Two Wheelers

The two-wheeler segment maintained healthy momentum in January 2026, with domestic volumes increasing 26.0% YoY and 18.9% MoM, while export performance remained mixed, rising 21.2% YoY but declining 2.6% MoM. Growth trends were supported by stable retail demand conditions, a gradual improvement in rural sentiment, and the rationalisation of discounting across categories. Hero MotoCorp outperformed peers during the month, with domestic volumes rising on both annual and monthly basis, driven by improved mix within the scooter portfolio and steady demand across select motorcycle models. Export volumes also remained healthy, supported by demand for premium offerings across international markets. TVS reported total volumes of 5.1 lakh units, up 28.7% YoY and 6.3% MoM, with growth largely driven by its scooter portfolio. Bajaj Auto reported a healthy monthly improvement, with volumes up 62.4% MoM. On an annual basis, domestic volumes grew by 25.4%. Eicher Motor continued to trail peers, with volume growth of 14.5% YoY and 0.7% MoM, reflecting a relatively slower recovery in its core motorcycle segment.

Commercial Vehicles

Tractors

The domestic tractor industry continued to witness strong momentum in January 2026, with combined domestic volumes rising 47.1% YoY and 28.6% MoM, supported by favourable rural sentiment and higher farm activity on the back of steady progress in rabi sowing and improved water availability. M&M reported domestic tractor volumes of 38.5k units, up 46.3% YoY and 27.4% MoM, while Escorts posted stronger growth at 50.8% YoY and 33.8% MoM. Demand was further aided by the improving affordability, supportive government policies and ongoing state-level subsidies, which are expected to underpin industry growth over the next few months.