Axis Securities Auto Sector Update: September 2026

Commercial vehicles led the sector with 30% year-on-year growth, while passenger vehicles recorded a steady 26% growth for the first half of FY27.

Reader Takeaway: Strong festive momentum fuels volume growth, but high base effects and weak rural demand create H2 headwinds.

What just happened

Axis Securities released its monthly performance report for September 2026, highlighting significant sales growth for major automotive players. Commercial vehicle (CV) manufacturers, including Eicher Motors and Tata Motors, saw growth rates of 52% and 31% respectively. Passenger vehicles also maintained strong momentum, with Maruti Suzuki reporting a 24% increase. Conversely, the tractor segment continues to struggle, recording a 19% volume decline in September due to uneven monsoon patterns.

Why this matters

The auto sector remains a key indicator of consumer sentiment and industrial activity in India. While domestic two-wheeler sales saw 17% growth in the April-September period, the shift in growth dynamics heading into the second half of the fiscal year is a critical monitor for retail investors.

Risks to watch

Analysts highlight that H2FY27 growth will likely be tempered by a high base effect from the previous year. Further, potential volatility in input costs, rising vehicle prices, and macroeconomic headwinds—such as fuel inflation and uneven rural income growth—pose risks to sustaining the current pace of demand.

Sector Outlook

Axis Securities maintains a positive long-term view, favoring the two-wheeler space for potential upside. They remain cautious on the tractor segment, noting its dependency on monsoon stability and rural economic health. Analysts suggest monitoring Eicher Motors, TVS Motors, Ashok Leyland, and Tata Motors for market share trends.