Nomura maintains FY26 auto growth forecasts despite June wholesale miss

Nomura on auto sector: Despite weaker-than-expected wholesale volumes in June 2025, Nomura has maintained its FY26 industry growth forecasts, citing expectations of a demand rebound in the second half of the year.

 

In its report dated July 1, Nomura retained its projection of 5 per cent Y-o-Y growth for passenger vehicles (PVs) and 7 per cent for two-wheelers (2Ws), expecting tailwinds from declining interest rates, lower income tax outflows, and a festive season boost. 

“We maintain our PV/2W industry growth forecasts of 5 per cent/7 per cent Y-o-Y for FY26F. We expect demand to improve in 2H, led by lower income tax and reduced interest rates,” said Kapil Singh and Siddhartha Bera, research analysts at Nomura.

 

 

However, June data showed a mixed performance across segments. PV wholesales dropped 7 per cent Y-o-Y, wider than Nomura’s forecast of a 5 per cent decline, while 2W volumes fell 0.4 per cent versus an expected 3 per cent rise. Medium and heavy commercial vehicle (MHCV) volumes declined 6 per cent, also missing the estimated 1 per cent fall.  ALSO READ | Morgan Stanley downgrades Dixon Tech to 'Underweight'; share price falls 3% 

Tractors emerged as the lone outperformer, posting a robust 10 per cent Y-o-Y rise, ahead of Nomura’s 6 per cent projection.

 

At the original equipment manufacturer (OEM) level, Mahindra & Mahindra (M&M), Hyundai, and Maruti Suzuki beat estimates, while Tata Motors, TVS Motor, and Bajaj Auto lagged. Export volumes, however, exceeded expectations across all reporting automakers.

 

Retail figures offered a more positive read. Vahan data showed 2 per cent Y-o-Y growth in both PV and MHCV segments, while 2W retail volumes rose 5 per cent in June.

 

Nomura flagged near-term risks on the production side, particularly for electric vehicles (EVs), due to China’s export restrictions on rare earth elements. This already weighed on EV volumes for Bajaj Auto and TVS in June, and internal combustion engine (ICE) models could face disruption from July onward.  ALSO READ | Reliance Industries' solar leap prompts Nuvama's highest-ever target price

 

In the EV 2W space, retail volumes in May stood at about 100,000 units, up nearly 30 per cent Y-o-Y. TVS led the segment in June with around 25,000 units and a 24 per cent market share, followed by Bajaj Auto (23,000 units, 22 per cent) and Ola Electric (20,000 units, 19 per cent). Ather Energy also improved its standing, capturing a 13.8 per cent share with sales of 14,500 units.

 

Despite short-term pressures, Nomura remains optimistic about a recovery in H2FY26.