Auto sector witnessed lackluster performance across key segments in June 2025, as weak retail demand and inventory correction impacted wholesale volumes, particularly in the passenger vehicle (PV), commercial vehicle (CV), and two-wheeler (2W) categories. Tractor sales, however, bucked the trend, supported by favourable rural sentiment and optimism around a normal monsoon.
Retail demand saw only modest year-on-year (YoY) growth in PVs, CVs, and 2Ws, while export performance remained a bright spot — especially in the 2W and PV segments. Among OEMs, Mahindra & Mahindra (M&M), TVS Motor Company, and Eicher Motors stood out with strong YoY growth.
In the PV space, M&M emerged as the only listed player to post YoY volume growth in June (+18% in utility vehicles), while Maruti Suzuki India, Tata Motors, and Hyundai Motor India reported volume declines. Demand is expected to stay subdued until the festive season, with analysts flagging weak domestic sentiment.
The two-wheeler segment showed signs of recovery in June. Excluding Bajaj Auto, the other major players — TVS, Royal Enfield, and Hero MotoCorp — delivered double-digit volume growth. Despite the rebound, aggregate 2W volumes rose just 1% YoY in Q1FY26, significantly below the ~7% full-year growth estimate.
CVs struggled in June, with aggregate wholesale volumes for listed players declining 3% YoY. The fall was attributed to pre-buying in May ahead of new driver cabin norms effective June. CV volumes were down 2% in Q1FY26, trailing the expected full-year growth of ~5%.
Tractors remained a bright spot, with M&M posting 13% YoY growth, outperforming Escorts Kubota, which reported a modest 2.2% rise. Analysts expect tractor momentum to stay strong amid healthy demand indicators.
Auto Stock Picks and Outlook
Brokerages remain cautiously optimistic about the sector. JM Financial expects near-term weakness in PVs, while recent rate cuts and rural recovery may support two-wheelers. CVs could stay muted during the monsoon but are likely to rebound on the back of government infrastructure spending.
Motilal Oswal Financial Services (MOFSL) continues to favour Maruti Suzuki and M&M shares among OEMs, citing strong export momentum and healthy tractor and UV demand. Emkay Global’s Chirag Jain remains bullish on the 2W segment, highlighting TVS Motor Company and Eicher Motors as top picks due to strong product pipelines and improving export markets.
While June sales fell short of expectations, select stocks in the auto sector remain in the fast lane for investors betting on a second-half recovery.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
