Maruti, M&M, TVS Motor drive strong auto finish in 2025: Motilal Oswal

India’s automobile sector is ending 2025 on a strong footing, with Maruti Suzuki, Mahindra & Mahindra (M&M) and TVS Motor emerging as key drivers of growth across passenger vehicles, tractors and two-wheelers, according to a note by Motilal Oswal. December Vahan retail trends suggest double-digit growth across all major auto segments, signalling that demand momentum has remained intact even after the festive season.

 

Motilal Oswal expects overall auto demand to stay healthy in the coming quarters, supported by GST rate cuts and favourable rural sentiment. Across segments, dispatches are expected to outpace retail sales in December as OEMs look to normalise dealer inventory levels following strong festive demand.

 

Passenger vehicles: Maruti, Tata Motors and M&M lead growth

In passenger vehicles, the brokerage expects the segment to post 19 per cent year-on-year (Y-o-Y) growth in dispatches in December, broadly in line with retail trends. Among listed OEMs, Maruti Suzuki, Tata Motors and Mahindra & Mahindra are likely to report 20 per cent or higher growth, while Hyundai Motor India is also expected to post double-digit expansion.

 

Maruti Suzuki is expected to sustain its growth momentum, driven by new launches such as Victoris, a revival in small-car demand, and strong export performance, supported by the ramp-up of the e-Vitara. Tata Motors is benefiting from a healthy revival in the compact SUV segment, while Mahindra & Mahindra is likely to continue its strong run on the back of robust demand for its utility vehicles. Hyundai’s performance, meanwhile, is expected to be aided by exports.  ALSO READ | Auto stocks in demand: Maruti hits new high; Hero Moto, Ashok Leyland up 2%

Two-wheelers: TVS, Royal Enfield outperform peers

Two-wheeler demand has remained steady in December, led by positive rural sentiment and GST rate cut benefits. Motilal Oswal expects aggregate retail growth of around 10 per cent for the top four players, while dispatches are likely to grow 20 per cent year-on-year as OEMs rebuild inventories after the festive season.

 

Within the segment, TVS Motor and Royal Enfield continue to outperform peers. Retail sales at Hero MotoCorp and Bajaj Auto appear relatively softer, though the brokerage views this as a temporary phase following strong sales in recent months. With the wedding season continuing into the fourth quarter and consumer sentiment remaining positive, demand momentum is expected to revive. Lean dealer inventory levels are also likely to keep dispatches healthy.

Commercial vehicles: Consumption recovery lifts demand

Commercial vehicle demand has remained strong across sub-segments. Light commercial vehicles are seeing healthy traction, reflecting an improvement in consumption trends, while medium and heavy commercial vehicles have also held up well, as indicated by Vahan retail data. Motilal Oswal expects the top three CV OEMs to post around 19 per cent year-on-year growth in dispatches in December, with favourable lead indicators suggesting sustainability in demand.  ALSO READ | Steel stocks up 2nd straight day, rally up to 5%; SAIL, JSL hit 52-wk highs

Tractors: M&M benefits from strong rural momentum

The tractor segment continues to show strong momentum, supported by a normal monsoon, healthy crop patterns, improved MSPs and a GST reduction to 5 per cent on tractors and components. Motilal Oswal expects the top two OEMs to post around 20 per cent year-on-year volume growth in December, with demand likely to remain strong going forward. Mahindra & Mahindra remains a key beneficiary of this uptrend.

Valuation and outlook

Following GST rationalisation, demand has picked up across segments and remained resilient even after the festive season. A notable trend is the pickup in entry-level vehicles across both passenger vehicles and two-wheelers. With demand improving, discounts are expected to gradually taper off.

 

Motilal Oswal’s top OEM picks remain Maruti Suzuki, Mahindra & Mahindra and TVS Motor, while preferred auto ancillary stocks include Endurance Technologies, SAMIL and Happy Forgings.

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