India's Auto sector shows mixed signals in Q1FY26: Report

New Delhi [India], August 22 (ANI): India's automobile sector displayed a patchy performance in the first quarter of FY26, with two-wheelers and tractors driving growth while passenger and commercial vehicles remained largely subdued, according to a report by Axis Securities.

Two-wheeler exports jumped 23.2 per cent compared to last year. However, domestic volumes slipped 6 per cent due to affordability pressures, with motorcycles posting a 9 per cent decline. Still, the outlook for the segment remains positive, as the industry banks on premium launches, a prolonged replacement cycle, and possible GST relief in the coming months.

Tractors also saw momentum, with domestic sales rising 9.2 per cent year-on-year, supported by pre-election schemes, healthy rabi output, and better monsoons. Exports, however, grew only 2.7 per cent, reflecting continued weakness in key overseas markets like the U.S. and Europe.

Passenger vehicle exports rose sharply by 34.4 per cent, driven by newer model launches and OEM focus on Africa and South America. But domestic sales dipped 1.4 per cent, as saturation in the SUV segment and pressure in the entry-level category weighed on demand. Inventory levels will need close monitoring, though the outlook remains stable to slightly positive.

Commercial vehicles also reported a split performance. While exports climbed 23.4 per cent year-on-year, domestic sales fell marginally by 0.6 per cent due to a high base effect and cautious fleet operators holding back amid subdued infrastructure activity after elections. The report noted that long-term prospects remain intact, supported by government spending on infrastructure, mining, and logistics.

The report highlighted that overall revenue for auto original equipment manufacturers (OEMs) under coverage grew by 7 per cent year-on-year in Q1FY26, supported primarily by strong exports and recovery in certain segments. EBITDA, however, rose only one per cent during the same period, as higher operational costs and wage revisions weighed on margins. Profit after tax climbed 10 per cent year-on-year, aided by forex gains, though it dipped 4 per cent sequentially.

The report added that potential GST cuts on two-wheelers and entry-level passenger vehicles, expected by September or October 2025, may provide a much-needed boost to revive affordability and consumer demand. (ANI)

(This content is sourced from a syndicated feed and is published as received. The Tribune assumes no responsibility or liability for its accuracy, completeness, or content.)