Auto sales review: Analysts optimistic on sector amid strong Dec growth

TVS Motor, Maruti Suzuki India, Mahindra & Mahindra, and Ashok Leyland are some of the top picks of brokerages

Strong monthly sales numbers by leading automobile companies, in December 2025, has helped analysts remain optimistic on the sector outlook for the rest of the current financial year. Auto sector, they believe, will continue to see strong momentum on improved consumer sentiment, demand uptick in rural areas, and lean inventory. 

 

Auto sales

 

Domestic passenger vehicle whole sales jumped 25.8 per cent on year to 405,000 units in December. Among original equipment makers, Maruti Suzuki India reported highest sales growt. The automobile manufacturing company saw it sales increasing 37.3 per cent on the year to 178,646 units during the month.  Mahindra & Mahindra and Tata Motors posted 23 per cent and 13.1 per cent, respectively in December. 

 

Factors behind the strong growth

 

Motilal Oswal Financial Services attributed the strong momentum in the auto sales growth to improved consumer sentiment due to Goods and Service Tax (GST) cuts, marriage season sentiment post festival season, and relatively low base given the weak macroeconomic factor in the preceding year.  Hence across sectors, all the original equipment makers saw robust growth in the wholesale number, the brokerage said. 

 

Two-wheelers saw an uptick as demand in rural areas picked up and new models launched, Axis Securities said. 

 

Outlook

 

The overall industry outlook remains optimistic because of the gradual demand recovery.  A reduction in the Goods and Services Tax (GST) rate and income tax relief are going to be the key demand drivers, Axis Securities said.

 

The broking remained cautiously positive on the auto sector for the fourth quarter of financial year 2026 (Q4FY26) and financial year 2027 (FY27). The industry will likely grow in high single digits, it said. 

 

In the tractor segment, apart from improving consumption on the back of direct and indirect tax incentives, robust rabi sowing and an increase in kharif production will drive the demand. 

 

Axis Securities prefers TVS Motor Company, Ashok Leyland, Mahindra & Mahindra, and Maruti Suzuki India. 

 

"Original equipment makers likely have noticed a reduction in inventory in December 2025, which will support them to maintain volumes in the fourth quarter," Motilal Oswal Financial Services said. 

 

Maruti Suzuki India, Mahindra & Mahindra, and TVS Motor are top picks of Motilal Oswal Financial Services.