India Auto Sector Sees Mixed Festive Trends: PVs & Tractors Up, Two-Wheelers Lagging

India's automobile industry experienced varied trends during the October festive season, according to a report by Nomura. Passenger Vehicles (PVs) and tractors displayed signs of recovery, with PV volumes estimated to increase by 3 per cent year-on-year. Medium and Heavy Commercial Vehicles (MHCVs) showed stable performance with about 2 per cent growth. In contrast, both tractors and two-wheelers (2Ws) were expected to see a decline of 6 per cent year-on-year.

The report noted that demand across tractors, PVs, and two-wheelers improved following Goods and Services Tax (GST) cuts, while MHCV demand remained steady. Tractor demand was stronger than anticipated, and two-wheeler growth was in the mid-to-high single digits. PV demand was projected to grow in the teens, boosted by festive buying and GST benefits. To gauge overall market trends effectively, the report suggested assessing cumulative retail data from August to November, as September saw pent-up demand. Cumulative festive data from August 27 to date indicated a 5-6 per cent volume growth for both PVs and two-wheelers.

PV wholesales were estimated at approximately 3 per cent year-on-year for October 2025, but PV retail volumes showed a stronger 14 per cent year-on-year growth. However, wholesale dispatches could be limited by truck availability and fewer production days due to holidays. Original Equipment Manufacturers (OEMs) with higher dealer inventories might capture more retail market share.

Looking ahead, the report forecasts mid-teens growth for the second half of FY26, supported by sharp GST cuts. However, overall festive season growth was below initial expectations. The report also highlighted the upcoming mandatory Anti-lock Braking System (ABS) implementation deadline from January 2026 as a significant risk for the sector.

Impact: This news is important for investors in the Indian automobile sector. The mixed performance across different vehicle segments, impact of GST, and future regulatory challenges like ABS implementation provide key indicators for sector performance and individual company prospects. The report's analysis helps in understanding current demand trends and potential future growth drivers and risks. Impact Rating: 7/10

Difficult Terms:

Passenger Vehicles (PVs): These are motor vehicles designed to carry passengers, typically including cars, SUVs, and vans, but excluding motorcycles and buses.

Two-wheelers (2Ws): These are vehicles with two wheels, such as motorcycles, scooters, and mopeds.

Medium and Heavy Commercial Vehicles (MHCVs): These are large trucks and buses used for transporting goods or passengers over long distances or for heavy-duty tasks.

Goods and Services Tax (GST): A consumption tax imposed on the sale of most goods and services. Cuts in GST rates can reduce the final price of vehicles, potentially boosting demand.

Original Equipment Manufacturers (OEMs): Companies that design and manufacture products that are then sold to other companies for branding and distribution.

Anti-lock Braking System (ABS): A safety system that prevents the wheels from locking up while braking, allowing the driver to maintain steering control.

Wholesale: The sale of goods in large quantities from a manufacturer or distributor to retailers.

Retail: The sale of goods directly to consumers.

Dealer Inventory: The stock of vehicles that a car dealership holds for sale.

Festive Momentum: The boost in sales and consumer spending often seen in India during major festival periods.