Recent monthly sales data underscores the resilience of the PV segment. Leading automakers such as Mahindra & Mahindra, Maruti Suzuki, and Tata Motors have reported robust growth, with SUVs continuing to dominate demand across both urban and rural markets. However, not all players are riding the same wave. Hyundai, for instance, has posted a marginal decline in domestic volumes over the past year, hinting at intensifying competition and shifting consumer preferences.
Offering his perspective on the sector, Subhash Gate from Choice Institutional Equities noted, “So, if you are talking about the PV space, like we already know that all the companies are coming with very good numbers. Like, if you are talking about Mahindra & Mahindra, Maruti, Tata Motors, three companies have come up with very good numbers in the month. We also expect same thing during the month.” He added that SUV-led growth remains the key driver, stating, “We expect that all the PV segment which is driven by SUVs will definitely perform very well in this particular month.”
The March quarter performance has also exceeded expectations. Gate pointed out, “If you are talking about in fourth quarter, the numbers are coming in 21.1% overall if you are talking about. So, as per our expectation numbers have come up with very good in this particular quarter and all the numbers are in line with our estimate.” He further emphasized that both rural and urban demand trends are supporting the growth trajectory, with PV volumes expected to grow in the range of 15–20%.
CV Segment Faces Temporary Speed Bump
In contrast, the commercial vehicle segment is witnessing signs of a near-term slowdown. While the longer-term outlook remains intact due to a favorable replacement cycle, short-term disruptions are becoming evident.
Gate explained, “So if you are talking about commercial vehicles, even in our report also we explained that there is a replacement cycle is going on because if we talk about previously there were two seasons we saw the replacement cycle which is 2009 to 2012, after that 2014 to 2019 and now 2026 to 2028 we expect this replacement cycle will boom, the commercial vehicle segment.”
However, caution among buyers is rising. “But what happened in the commercial vehicle segment is that like now people are more cautious about the logistic issues. So, because of that people are afraid to buy commercial vehicles,” he said.
Despite this, some pockets remain resilient. Gate highlighted that “In terms of M&HCV trucks as well as in terms of LCV, like 10 to 11 percentage as per our expectation the numbers are pretty good.” Yet, weakness in the bus segment has dragged overall performance, impacting companies like Ashok Leyland and Eicher Motors.
He also flagged external risks, noting, “We expect that because of supply chain disruption and logistic issues, commercial vehicles numbers may get impacted but will definitely if war situation may get prolonged, it will definitely be impacted for next two to three months.” Still, he maintained confidence in the structural upcycle, adding that the replacement cycle is expected to continue until 2028.
Supply Risks and Cost Pressures Loom
Beyond demand trends, the industry faces potential headwinds from rising input costs and supply constraints, particularly related to gas availability and pricing.
Gate observed, “So, if you are talking about like recently government has hiked the price. So, it will definitely impact the demand of the overall auto industry.” He also warned of broader implications, stating that higher freight, insurance, and export-related costs could weigh on the sector, especially since exports account for 15–20% of total sales.
On the production front, automakers have so far avoided disruptions, but risks remain. “Right now we are not facing till 31st March we are not facing any kind of production disruption, but as soon as these gas related, CNG related issues will persist longer time, it will definitely impact auto ancillaries, then it will directly impact production of these particular companies,” he said.
Capacity utilization is another concern, particularly for market leader Maruti Suzuki. “Maruti Suzuki already work on full capacity of 90 to 100 percentage… if they get hampered for this particular production disruption, it will definitely impact on their volumes going ahead,” Gate cautioned.
Tractor Segment: Mixed Signals Ahead
The tractor segment, often seen as a proxy for rural health, is also showing early signs of stress despite a strong base.
Gate explained, “Right now if you see that even most of the managements had told in the conference call that tractor industry may get some kind of slip in upcoming months or upcoming quarters because of the rabi and all these kharif picks are not that much efficient in this particular season.”
While March numbers remain healthy on a year-on-year basis, underlying risks tied to agricultural output and fertility conditions could lead to volatility in the coming quarters.
The Road Ahead
The Indian auto sector remains fundamentally strong, supported by SUV demand, rural recovery, and an ongoing CV replacement cycle. However, near-term uncertainties—from geopolitical tensions to supply chain disruptions and input cost pressures—are likely to create pockets of volatility.
For now, the growth engine is firmly in the hands of passenger vehicles. Whether commercial vehicles and tractors can regain momentum will depend largely on how quickly global and domestic disruptions ease.
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