Muted Auto Performance Overshadowed by Tractor Gains in FY26 Q1

The automobile sector underperformed in the first quarter of FY26, with a 6% decline in domestic volumes excluding tractors, which grew by 9%. Two-wheelers led the downturn with an 8% decline. In contrast, utility vehicles and buses displayed modest growth. Rising costs challenge future prospects.

In the initial quarter of FY26, the automobile sector witnessed subdued performance, as revealed by a report from Motilal Oswal Financial Services. The report highlights a 6% year-on-year decline in domestic auto volumes, excluding tractors, with urban demand weakness notably impacting two-wheelers.

Tractors emerged as a bright spot, registering a 9% growth in the same timeframe, contrasting the 8% decline in two-wheeler volumes and a 1% drop in both passenger and commercial vehicles. Although three-wheeler volumes remained stable, motorcycles saw a 9% decline, while scooters dipped by 5%.

Passenger vehicles experienced an 11% decline in car volumes, but utility vehicles offset some of the loss with a 4% growth. Within commercial vehicles, medium and heavy segments fell by 4.5% and light vehicles by 1%, whereas buses saw an 8% increase. Financially, revenues rose by 4%, driven by OEM and auto ancillary growth, yet rising input costs continue to pose challenges.