New Delhi
India’s automobile sector witnessed a demand-led yet uneven recovery in FY26, with two-wheelers emerging as the primary growth driver, according to a report by Deloitte India. Urban demand and premiumisation trends supported overall growth, while rural markets continued to face pressure.
Two-wheeler wholesale volumes rose 10.7% year-on-year, while retail sales recorded a stronger increase of 13.4%. The segment also saw a notable shift toward premium motorcycles, which surged 40.7%, alongside an 18.5% rise in scooter demand.
Passenger vehicles maintained their premiumisation trajectory, with mid-size entry segments gaining traction as traditional entry-level categories weakened. Meanwhile, commercial vehicles entered a goods-led upcycle, growing around 12.6%, supported by infrastructure expansion and replacement demand.
Electric vehicle adoption continued to rise but remained uneven across regions. Electric two-wheelers grew 21.8 per cent, though overall penetration increased modestly to 6.5% due to pricing challenges and limited charging infrastructure.
Regionally, Kerala led EV penetration at 14.1%, while Karnataka and Odisha showed steady progress. Maharashtra, however, saw its share decline despite higher volumes, reflecting a rebound in internal combustion engine demand.
The report also noted that pricing adjustments and GST rationalisation in the latter half of FY26 improved affordability in the sub-350cc motorcycle segment, narrowing the gap with commuter bikes.
Overall, urban markets drove growth through premium offerings and feature upgrades, while policy support and trade developments are expected to shape the sector’s medium-term outlook.
