India’s automobile sector began FY27 on a strong note, with wholesale volumes rising across categories in April despite ongoing pressure from inflation and higher raw material costs, according to a Nomura report. Passenger vehicle (PV) wholesales increased by 26% year-on-year to nearly 445,000 units. Two-wheelers and medium & heavy commercial vehicles (MHCVs) also posted solid gains of 33% and 14% respectively, while tractor sales surprised on the upside with a 22% rise compared to an expected decline.

Retail demand stayed firm, with PV sales reaching about 405,000 units, up 16% year-on-year. Dealers reported steady consumer interest even after price increases, although there were signs of slightly slower new bookings and inventory adjustments. Electric vehicle (EV) adoption continued to pick up pace. PV EV penetration rose to 5.5% in April from 4% in FY26, while in the two-wheeler segment it climbed to 7.8% from 6.5%. The report suggests that improving demand sentiment, possible fuel price increases, and supportive policy measures could further accelerate EV growth.

However, rising input costs are creating margin pressure, estimated at over 380 basis points for PVs and more than 560 basis points for two-wheelers between September 2025 and April 2026. Automakers may need to increase prices, which could impact demand, especially in budget segments. Performance among manufacturers was mixed—Maruti Suzuki and Mahindra’s tractor division outperformed expectations, while Mahindra’s utility vehicles, Tata Motors PVs, TVS Motor, and Hero MotoCorp fell short due to production constraints.

Waiting periods have mostly normalised, except for a few new models. Meanwhile, registration data showed continued growth across segments, with PVs up 16%, MHCVs 12%, and two-wheelers 13.5% year-on-year. In the electric two-wheeler space, sales surged 62.1% to around 148,000 units, with TVS Motor leading the market, followed by Bajaj Auto, Ather Energy, Hero MotoCorp, and Ola Electric. Nomura expects steady PV growth of around 8% annually through FY26 and FY27, with EV adoption approaching a key inflection point as it gains wider acceptance across segments.