Two-wheelers and passenger vehicles are expected to post healthy double-digit retail growth year-on-year in June 2026, according to a report by Yes Securities Institutional Equities. The automobile sector is anticipated to sustain demand momentum, driven by a favourable base and strong traction from new launches.
Two-Wheeler Retail Growth
The report said two-wheeler retail sales are likely to grow over 15 per cent year-on-year, supported by a favourable base. However, on a month-on-month basis, sales may see a mild decline of 2-3 per cent due to the impact of Adhik Maas-related purchase delays. Retail sentiment across key regions remains stable, though slightly below March-April levels. Rural demand remains cautious due to adverse weather conditions, higher fuel costs and recent price increases, which are impacting entry-level purchases.
Underlying traction remained intact, especially in the >125cc category, both in ICE scooter and motorcycle segments, the report noted.
Passenger Vehicle Demand
Passenger vehicle (PV) sales are expected to grow in healthy double digits, supported by a sharp post-Adhik Maas rebound and strong traction from new launches, according to channel checks. Improved footfalls were reported across regions, with South India recording healthy double-digit growth, while West and North India recorded high single-digit to early double-digit growth.
Price Hikes and EV Demand
Industry-wide price hikes of 0.5-1.5 per cent were implemented across major OEMs in June 2026, marking the second increase in Q1 FY27, as companies passed on rising input costs. Electric vehicle (EV) demand remained strong month-on-month, driven by fuel cost concerns and new launches, with inquiries and bookings rising 15-20 per cent, the report said.
Tractor Segment Outlook
For the tractor segment, retails remained stable in June 2026, with volumes expected to stay strong in Q1 FY27, growing 23-24 per cent year-on-year, but likely to moderate later in the year. The outlook is influenced by a steep price hike of Rs12,000-12,500 per unit implemented in April 2026 and a further hike of similar amount expected by August-September 2026. Additionally, low subsidy-linked volumes, as one-time subsidies available from the state of Maharashtra (30,000-35,000 units) and Punjab (12,000-13,000 units) which aided volumes in FY26, will no longer be available in FY27, the report said.
