The Indian automobile sector is cruising in top gear, with its benchmark stock index scaling a new peak, powered by unexpectedly resilient consumer demand that extended well beyond the festive season. The Nifty Auto index surged 1.3% on Monday, January 05, to touch a fresh record high of 29,179. This marked its fifth consecutive session of gains, resulting in a cumulative rise of 5.75%.
Broad-Based Growth Drives Market Rally
This bullish sentiment on Dalal Street is firmly rooted in robust wholesale numbers reported by all listed original equipment manufacturers (OEMs) for December. Most companies recorded double-digit expansion, helping the domestic industry finish the year on a solid note. The growth was fuelled by a combination of sustained demand, attractive discounts, and the recent rationalisation of Goods and Services Tax (GST).
Leading the charge among individual stocks was Eicher Motors, whose share price jumped 2% to an intraday high of ₹7,477. Other major players including Maruti Suzuki, UNO Minda, TVS Motor Company, Hero MotoCorp, and Bajaj Auto all traded with gains exceeding 1%.
Segment-Wise Performance Highlights
A key positive trend has been the revival in demand for entry-level vehicles, making them more affordable for budget-conscious buyers after the GST revision. This was evident in both two-wheelers (2Ws) and passenger vehicles (PVs).
In the two-wheeler segment, December domestic wholesale figures showed impressive year-on-year growth: Hero MotoCorp (up 43%), TVS Motor Company (up 54%), and Royal Enfield (up 30%). Bajaj Auto posted a more modest 4% rise.
The passenger vehicle segment also displayed strong momentum. Maruti Suzuki led with 37% growth, followed by Mahindra & Mahindra (23%), and Tata Motors Passenger Vehicles (14%). Hyundai Motor India's domestic PV wholesale remained flat compared to the previous year.
Q3 Volumes Get a Lift from CVs and Tractors
Brokerage firm Motilal Oswal reported that overall auto industry volume growth for the December quarter stood at a healthy 17% year-on-year. The growth was broad-based, with two-wheelers and passenger vehicles each rising 17%. However, commercial vehicles (CVs) and tractors outpaced the pack, growing 22% and 21% YoY respectively.
"A key highlight has been that all three CV OEMs posted over 20% growth in the third quarter. Further, within tractors, while Mahindra & Mahindra recorded 23% YoY growth, Escorts’ volumes grew 14% YoY," the brokerage noted.
Within two-wheelers, TVS Motor (+27%) and Royal Enfield (+21%) were the growth drivers. Similarly, in passenger vehicles, excluding Hyundai, the other listed OEMs posted robust double-digit expansion.
Optimistic Outlook for 2026
Analysts remain upbeat about the demand trajectory in the near future. Brokerage JM Financial anticipates continued positive consumer sentiment, driven by the GST rationalisation, the upcoming marriage season in February 2026, and the recent formation of the 8th Pay Commission. These factors are expected to support demand, particularly in the entry-level PV and two-wheeler segments.
Commercial vehicle demand is also likely to maintain its momentum, led by higher government capital expenditure and improved infrastructure activity. Motilal Oswal observed that demand has picked up across segments following the GST change and appears to have remained intact even after the festive period concluded.
The confluence of these factors suggests that the automobile sector's rally, reflected in the record-breaking Nifty Auto index, may have more road ahead in 2026.
