Auto sector opens FY27 on strong footing: PVs jump 20%, 3W exports soar 87.5%: PL Capital

India’s automobile sector has kicked off FY27 with strong momentum, posting broad-based volume growth in April despite price hikes and tighter discounting, according to a report by PL Capital. Robust demand across passenger vehicles and rural-linked segments, along with a sharp export push, underpinned the upbeat start to the fiscal.

Passenger vehicles (PVs) remained a key growth engine, with volumes rising around 20% year-on-year (YoY), driven by sustained urban demand and rising SUV preference. Domestic PV dispatches stood at 4,39,555 units, up 24.7% YoY. Inventory levels improved sharply to nearly 28 days from 52 days a year ago, signalling healthier demand absorption and better channel discipline.

On a sequential basis, however, the sector saw a typical cooldown after the March year-end surge, with most segments reporting month-on-month (MoM) declines.

Exports power growth; 3Ws steal the show

Three-wheelers (3Ws) emerged as the standout performer, clocking a 53.5% YoY jump in volumes. Export demand was the key driver, surging 87.5% YoY and 36.8% MoM—the highest across segments.

Two-wheelers (2Ws) recorded volumes of 2.13 million units, with exports rising 20.9% MoM, offsetting largely flat domestic demand. This indicates improving traction in overseas markets even as rural recovery remains gradual.

Commercial vehicles (CVs) saw the steepest sequential correction, with volumes falling 26.9% MoM, dragged by a sharp 44.6% drop in medium and heavy commercial vehicles (M&HCVs) following strong March dispatches.

Tractors stood out as a steady performer, rising 3.3% MoM, reflecting resilient rural sentiment and continued farm sector strength.

Demand resilient, risks linger
“The auto sector has demonstrated resilience with a strong start to FY27, supported by healthy demand across segments and improving inventory levels,” said Amnish Aggarwal, Co-Head, Institutional Equities. He added that while geopolitical tensions and input cost pressures could weigh on near-term sentiment, underlying demand—especially in PVs and rural segments—remains intact.

Among OEMs, Maruti Suzuki and Tata Motors led PV growth, while Mahindra & Mahindra continued to gain from strong traction in tractors and utility vehicles. Export-led momentum supported Bajaj Auto, while Hero MotoCorp saw recovery on a low base.

While export trends remain uneven and supply chain disruptions persist for select players, the sector’s fundamentals remain firm, supported by premiumisation, rural recovery and new product cycles. However, risks from the West Asia conflict and potential weather disruptions, including El Niño, remain key variables to watch.