India’s automobile sector recorded higher sales across passenger vehicles, two-wheelers, commercial vehicles and tractors in January 2026. Brokerage firm Motilal Oswal Financial Services said the sector’s medium-term outlook remains positive.
Sales growth was reported across all major segments during the month. Lower dealer inventory levels at the end of December and steady retail demand led manufacturers to increase dispatches at the start of the year, resulting in growth in both wholesale and retail volumes.
Growth was observed in passenger vehicles, two-wheelers, commercial vehicles and tractors, indicating that the recovery was broad-based and not limited to a single segment.
Passenger vehicle segment trends
The passenger vehicle segment showed mixed trends in January. While the December quarter remained b, retail sales moderated slightly during the month. Manufacturers offered discounts to support volumes.
Despite this, wholesale sales increased on a year-on-year basis, supported by b demand for SUVs, new model launches and restocking following lower inventory levels. Exports also contributed for some companies, indicating gradual strengthening of demand in the passenger vehicle segment.
Two-wheeler segment performance
The two-wheeler segment recorded the best performance in January. Motorcycles, scooters and three-wheelers posted year-on-year growth.
Demand was supported by improving rural conditions, new product launches and higher exports to new markets. Scooter demand remained higher, with both petrol and electric scooters contributing to growth.
Commercial vehicles and tractors
The commercial vehicle segment reported growth despite a high base. Improved earnings for truck operators, positive freight indicators and stable customer sentiment supported volumes. On a full-year basis, the segment recorded double-digit growth.
The tractor segment emerged as one of the best performers. Higher rainfall, improved reservoir levels, good crop output, an increase in minimum support prices and higher rural cash flows led to a sharp rise in tractor sales.
Rising entry-level demand
Demand for entry-level cars and two-wheelers increased during the period, indicating improvement in purchasing capacity among consumers. Demand remained steady after the festive season despite changes in GST.
Companies are entering the final quarter with lower inventory levels, which may result in a gradual reduction in discounts, particularly in passenger vehicles.
Motilal Oswal outlook and stock preferences
Motilal Oswal Financial Services said the automobile sector’s medium-term outlook remains positive, supported by demand trends, product mix improvement and rising sales volumes.
The brokerage highlighted TVS Motor Company with a target price of ₹4,500, citing consistent market share gains and operational performance. It also maintained a BUY rating on Maruti Suzuki India with a target price of ₹19,937, supported by rising demand for small cars, strength in the SUV segment, new launches and growing exports.
