Indian Auto Industry Set For Double-Digit Growth After 5 Quarters Of Lull

Indian automobile manufacturers are set to achieve double-digit profit during the September quarter, according to analysts, driven primarily by robust demand for two-wheelers and tractors, whilst improvements in the passenger vehicle (PV) segment are anticipated to materialise in December, says a report by news agency Reuters.

The sales volumes and profitability of car manufacturers have suffered setbacks, with companies recording single-digit expansion over the last five quarters, attributed to consumption deceleration, a global semiconductor shortage and uncertainties surrounding the US tariff policies.

However, tax and interest rate reductions are expected to stimulate demand further, with the recovery projected to fully manifest in the December quarter, according to Hitesh Thakurani and Shubhangi Kejriwal of HDFC Securities, as quoted in the report.

September GST Relief

The government's September tax (GST) relief on goods ranging from soaps to small cars helped lift retail sales in the final weeks of the month.

Indian automakers are forecast to post 10–17% revenue growth and approximately 15% profit growth year-on-year in the September quarter, spearheaded by gains in two-wheelers and tractors, according to HDFC Securities.

Two-Wheeler Manufacturers Benefit

Top two-wheeler makers Bajaj Auto and TVS Motor are set to benefit from stronger exports, favourable forex rates and a 12% fall in shipping costs, the brokerage said.

TVS will report results on Tuesday and Bajaj Auto on November 7.

Tractor Sales Recovery

Tractor sales have also aided the recovery, supported by a normal monsoon, lower borrowing costs and tax cuts, according to Motilal Oswal. Analysts at Nomura, Kapil Singh and Siddhartha Bera, said tractor volumes were likely to beat expectations.

PV Segment Remains Subdued

Growth in the passenger vehicles segment is expected to remain soft, according to Nomura, due to supply shortages, with sales set to dip 1.5% year-on-year in the quarter.

Maruti Suzuki Faces Margin Pressure

Market leader Maruti Suzuki is likely to face short-term margin pressure from higher launch costs and customer discounts, but exports, led by its E-Vitara line, are emerging as a key growth engine, according to brokerages.

Tata Motors Recovery Expected

Tata Motors is expected to lag due to cyberattack-led production shutdowns at Jaguar Land Rover but several brokerages said growth is set to pick up due to tax cuts, festive demand and exports.

Maruti will report results on Friday, followed by Mahindra & Mahindra on November 4. Tata Motors is yet to announce a date.