Automobile Sector: Comprehensive Industry Analysis (Q2 Fy26 & H1 Fy26 Focus)

This report synthesizes data from recent investor documents and concall transcripts of key players in the Indian automobile sector, including Maruti Suzuki India Limited, Eicher Motors Limited, Hyundai Motor India Ltd., TVS Motor Company Limited, Ather Energy Limited, and Zelio E-Mobility Limited. The analysis provides an in-depth look into the industry's market landscape, financial performance, competitive dynamics, operational characteristics, growth drivers, risk factors, capital allocation strategies, and future outlook, primarily focusing on the Q2 FY26 and H1 FY26 periods.

A. Industry Overview & Market Landscape

The Indian automobile sector is a dynamic and multifaceted industry, characterized by diverse product segments, evolving consumer preferences, and a significant shift towards electric mobility. The market encompasses passenger vehicles (PVs), two-wheelers (2Ws), three-wheelers (3Ws), and commercial vehicles (CVs), each with distinct growth trajectories and competitive landscapes.

Total Addressable Market Size and Growth Rates: The overall industry growth presents a mixed picture, with certain segments experiencing robust expansion while others face headwinds.

• Passenger Vehicles (PVs): Hyundai Motor India reported that the first five months of FY26 (Apr-Aug 2025) saw a 1.6% YoY de-growth in the industry. However, there was a significant rebound in September with 5% growth and a strong acceleration in October with 17% growth. This suggests a recovery in demand, particularly driven by the festive season. Tata Motors Passenger Vehicles (India PV) also confirmed this trend, delivering over 1 lakh vehicles during the Navratri to Diwali festive season, marking a 33% YoY growth. The full year FY26 industry growth for PVs is projected to be around 5% (+/- 2%).
• Two-Wheelers (2Ws): TVS Motor Company indicated that the domestic ICE 2-wheeler market grew by 8% in Q2 FY26, while the international market expanded by 26%. TVSM itself significantly outpaced the industry, growing its domestic ICE sales by 21% and international sales by 31% in Q2 FY26. Total ICE sales for TVSM grew by 23% against an industry growth of 11%. The festive season (Dusshera + Diwali) saw VAHAN industry growth of 24%, with TVSM growing at 32%. This indicates strong underlying demand, especially during peak seasons.
• Electric Vehicles (EVs): The EV segment, particularly 2-wheelers and 3-wheelers, is experiencing exponential growth, albeit from a smaller base.
  • EV 2-wheelers (Slow Speed): Zelio E-Mobility highlighted that the slow-speed EV 2-wheeler industry sold 8.2 lakh units in FY25, compared to 11.4 lakh high-speed EV 2-wheelers. The demand for slow-speed EV 2-wheelers is estimated to reach 17.5 lakh units by FY28, indicating a significant growth potential.
  • EV 2-wheelers (High Speed): Ather Energy reported a 67% YoY increase in units sold in Q2 FY26, with total income growing by 57% YoY. TVS Motor Company's EV 2-wheeler sales grew by 7% in Q2 FY26, reaching 80,000 units. Hyundai noted that the alternate powertrain segment (CNG + EV) saw industry-beating growth, with EV growing +126% YoY in H1 FY26.
  • EV 3-wheelers: TVS Motor Company's 3-wheeler sales (including EV) grew by a robust 41% in Q2 FY26, reaching 53,000 units. Zelio E-Mobility is also entering this segment, seeing significant potential in the L3 segment (e-rickshaw, speed <35).
• Commercial Vehicles (CVs): VECV (Eicher Motors' joint venture) reported a 5.4% increase in total sales volume for Q2 FY26 (21,901 units) and 7.5% for H1 FY26 (43,511 units). Light and Medium Duty Trucks (LMD) showed good growth (9% in H1), while Heavy Duty Trucks (HD) saw a modest 3.5% increase in Q2 FY26. Buses grew by 1.9% in H1 FY26.

Market Structure and Segmentation: The market is segmented by product type, fuel type, geography, and customer demographics.

• By Product:
  • Passenger Vehicles: Dominated by SUVs, which are gaining significant traction. Hyundai reported SUVs contributing 70%+ of its sales, especially post-GST reforms. Maruti Suzuki's UV segment, despite a -13.9% decline in Q2 FY26 domestic sales, still accounts for a substantial 35.3% of its domestic sales. Compact cars remain a strong segment for Maruti (43.6% of domestic sales).
  • Two-Wheelers: Includes motorcycles (mini, compact, mid-size, premium) and scooters. Royal Enfield holds a dominant ~84% market share in the midsize motorcycle segment. TVS Motor Company has a strong presence in the scooter market, with a combined EV+ICE market share of ~38-39%.
  • Three-Wheelers: Primarily used for cargo and passenger transport (e-rickshaws). TVS and Zelio are active in this space, with Zelio focusing on the L3 segment.
  • Commercial Vehicles: Light, Medium, and Heavy Duty Trucks, and Buses. VECV is a key player, holding the #1 position in LMD trucks with a 34.8% market share in Q2 FY26.