Auto Wholesale Report February 2026: Key Highlights and Future Outlook

Update of the Auto Wholesale sector for the month of May

Broad-based annual growth sustained; 2Ws lead while PVs moderate on a monthly basis

The overall landscape for auto OEMs remains encouraging, with the industry reporting 27.3% YoY / down 1.8% MoM growth in aggregate wholesales for February 2026. Volume growth was supported by the continued pass-through benefits of GST rationalization, which helped improve affordability and extend positive retail momentum into the new calendar year. On a monthly basis, volumes moderated across the board, with passenger vehicles witnessing the sharpest MoM deceleration at -8.1%, partly reflecting demand pull-forward into January ahead of anticipated price hikes. Importantly, retail demand remained resilient through the month, with Vahan registration data showing broad-based expansion of 25%-36% YoY across key categories, confirming that the moderation in wholesales did not reflect any underlying softening in consumer demand.

Looking ahead, March is traditionally characterized by an aggressive year-end wholesale push as OEMs and dealers aim to meet annual volume targets, which should support a meaningful monthly uptick in dispatches. On an annual basis, the demand outlook for FY27 remains constructive. Key monitorables include the quantum and timing of price hikes by OEMs at the start of the new financial year and the evolving contours of CAFÉ-III norms.

On the regulatory front, CAFÉ-III remains a key structural overhang for the PV segment heading into FY27. The norms are scheduled to come into effect from April 1, 2027 and will run through FY32, progressively tightening fleet-average CO2 emission requirements (starting around 92.5 g/km and reaching 77.08 g/km by 2032) relative to the current CAFÉ-II threshold of 113 g/km. In its latest draft, the government has removed the earlier proposal of a small-car CO2 concession while also tightening weight-based relaxation factors and strengthening the overall compliance framework. Non-compliance with these limits will attract financial penalties on a per-vehicle basis. Unlike CAFÉ-II, where several OEMs met fleet-average targets with near-zero BEV penetration, compliance under the new cycle will be significantly more challenging without a meaningful share of electric vehicles in the product mix. The removal of the small-car concession could also lead to higher entry-level costs, as manufacturers may need to incorporate additional fuel-efficiency technologies to remain compliant. This raises the likelihood of price increases in India’s most price-sensitive segments, potentially creating a demand headwind.

Passenger Vehicles

The PV industry maintained a modest growth trajectory in February 2026, with domestic volumes up 10.0% YoY / down 8.1% MoM. While wholesale trends remained steady, retail demand continues to strengthen, with Vahan sales growing 25% YoY. The retail momentum is largely driven by a healthy booking pipeline, new model and variant launches, and financial year-end buying, while dealers remain cautious on inventory build-up ahead of FY-end. Among OEMs, MSIL reported relatively muted domestic performance, with domestic volumes at 161k units (up 0.1% YoY / down 7.8% MoM), while exports stood at 39k units (up 56.5% YoY / down 23.3% MoM). The drag on domestic dispatches was largely driven by muted demand in the entry-level segment, which offset growth in the UV portfolio. The race for the runner-up position continues to favour TMPV, with domestic volumes recorded at 62k units (up 34.2% YoY / down 11.2% MoM). Growth was primarily driven by strong traction in the Nexon and Punch portfolios, with the company’s retail market share rising to 13.7% (up 175 bps YoY). Meanwhile, M&M recorded domestic dispatches of 60k units (up 19.0% YoY / down 5.5% MoM), suggesting broad-based growth across its portfolio. During the month, M&M’s market share declined marginally to 13.5% from 14.0% last year.

Two Wheelers

The 2W segment emerged as the key growth driver for overall industry volumes, with domestic volumes increasing 33.6% YoY, while moderating to 1.3% MoM growth. The uptick in volumes was largely driven by healthy conversions, continued tailwinds from weddings and festivals, and improving rural liquidity. Hero MotoCorp outperformed peers during the month, with volume growth supported by continued momentum in the scooter segment, aided by strong consumer response to refreshed models such as Xoom and Destini. TVS Motor volumes grew 31.0% YoY to 529k units, supported by steady demand for the Jupiter portfolio. Bajaj Auto reported a monthly decline in volumes, with dispatches falling 13.3% MoM to ~186k units, though performance remained strong on a yearly basis with 27.4% YoY growth. Royal Enfield continued to trail peers, with volumes increasing 11.3% YoY to ~101k units, while volumes declined 3.3% MoM, indicating relatively slower momentum in its core motorcycle segment.

Commercial Vehicles

The upcycle in the CV segment continues, with industry volumes growing 23.6% YoY / down 1.6% MoM. The uptick in volumes is broad-based across tonnage segments, supported by increasing infrastructure activity, an improving freight environment, and a steady replacement cycle. Volume growth for TMCV remained broad-based across tonnage bands, with total domestic dispatches recorded at ~41k units (up 32.8% YoY / up 5.3% MoM). Ashok Leyland’s total volumes grew 23.8% YoY / 1.1% MoM to ~22k units, with the bus and export segments acting as the key drags on the overall performance. VE Commercial Vehicles (Eicher) reported wholesale volumes of ~10k units (up 23.4% YoY / down 5.8% MoM), with growth supported across tonnage categories. M&M’s domestic CV volumes grew 11.8% YoY / down 9.3% MoM, with lower-tonnage vehicles remaining laggard, while 3W volumes recorded robust growth.

Tractors

The domestic tractor industry maintained healthy momentum in February 2026, with combined domestic volumes rising 31.5% YoY to ~42k units, supported by positive rural sentiment, elevated farm activity and a favourable Rabi crop outlook. However, industry volumes declined 12.1% MoM, reflecting the typical post-season moderation after strong dispatches in the previous month. M&M reported domestic tractor sales of ~32k units, registering strong YoY growth of 34.6%, though volumes declined 16.5% MoM from the higher base in January. Escorts Kubota recorded domestic volumes of ~10k units, up 22.1% YoY and 6.4% MoM, indicating relatively stronger monthly performance.