Two-wheelers and passenger vehicles set to lead India auto growth in FY27E

ICICI Direct forecasts 8–10% FY27E volume growth, led by two-wheelers and passenger vehicles as GST 2.0 and demand momentum support the sector. August registrations rose 16% year-on-year, with Tata Motors, Maruti Suzuki, Mahindra, Bajaj Auto and TVS posting strong gains.

— Source publishedWed, 2 Sept, 2026, 09:09 IST·First seen Wed, 2 Sept, 2026, 09:12 IST·Source BL · Consumer & Economy

What happened

India automotive sector · ICICI Direct expects Indian two-wheelers and passenger vehicles to lead FY27E auto growth, supported by GST 2.0 and stronger demand.

Key facts

  • FY27E volume growth guidance: 8-10%
  • August 2026 Vahan registrations: approximately 24 lakh, up 16% YoY
  • Bajaj Auto volumes: up 30% YoY; exports up 53%; domestic up about 10%
  • TVS Motor volumes: 5.9 lakh, up about 20.5%; exports up 29%
  • Royal Enfield volumes: approximately 1.26 lakh, up 11%
  • Tata Motors PV volumes: around 68,000, up 56%; EV volumes: 16,549, up 94%
  • Maruti Suzuki volumes: around 2.16 lakh, up 21%
  • Mahindra & Mahindra PV volumes: approximately 59,000, up 50%
  • Hyundai volumes: roughly 66,000, up 9%
  • Tata Motors CV dispatches: around 44,000, up 49%
  • Ashok Leyland volumes: roughly 21,000, up 38%
  • Escorts Kubota tractor volumes: around 10,000, up 19%

Why this matters

Prioritize partnerships or acquisitions in dealer networks, financing, components and aftersales businesses exposed to high-growth two-wheeler and passenger-vehicle segments.

What to watch

  • Monthly Vahan registrations versus the 8–10% FY27E volume-growth trajectory, especially two-wheeler and passenger-vehicle split.
  • Festive-season bookings, cancellation rates, dealer inventory days and wholesale-retail divergence.
  • GST 2.0 implementation details, including any effective tax-rate changes by vehicle class.
  • Rural wage growth, monsoon outcomes, crop prices and agricultural cash-flow indicators.
  • Auto-loan approval rates, financing spreads, delinquencies and down-payment trends.
  • OEM discount levels, production cuts or increases, and waiting-period changes for high-demand models.
  • Fuel prices, interest-rate moves and inflation that could affect affordability.
  • OEMs are likely to raise production schedules selectively, prioritizing fast-moving two-wheeler, compact SUV and fleet-ready models rather than broad capacity expansion.
  • Dealers may increase festive-season inventory and local marketing spend, with higher registrations improving service, insurance and accessories attachment opportunities.
  • Auto financiers and NBFCs may compete more aggressively for retail-originated loans, supporting affordability but potentially compressing yields and loosening underwriting at the margin.
  • Component makers with exposure to motorcycles, entry-level PVs, tyres, batteries, electronics and aftermarket consumables should see stronger order visibility.
  • Competitive intensity is likely to rise in passenger vehicles as Tata Motors, Maruti Suzuki and Mahindra seek to defend or extend registration momentum, keeping discounts and dealer support elevated.

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