India’s auto story is heading into 2026 with its engine revving, and Jefferies believes the ride is set to continue. The brokerage says it enters 2026 with a positive outlook for Indian auto demand, projecting 6–8% volume CAGR across segments over FY26–28. It sees TVS Motor, Mahindra & Mahindra and Eicher Motors as the key beneficiaries and labels them its preferred ‘buy’ calls.
The optimism rests on multiple tailwinds: underlying economic growth, recent GST reduction, easing liquidity, and upcoming government wage hikes. FY26 may have begun on a soft note — two-wheeler and passenger vehicle registrations grew just 3% YoY in April–July — but momentum picked up sharply thereafter, accelerating to 15–16% in August–December. Trucks recovered from –3% to +10%, while tractors improved from +7% to +24% over the same period.
Jefferies has consequently raised FY26–28 volume estimates for trucks by 12–14%, while trimming two-wheeler estimates by up to 6%. It now expects FY26 wholesales to grow 8% for PVs and two-wheelers, and 17–18% for tractors and trucks, followed by 6–8% volume CAGR across segments over FY26–28.
Beneath the headline demand story, Jefferies highlights a decisive shift in market shares. In two-wheelers, TVSL’s market share has risen to a 22-year high domestically and to a new high in exports, while EIM is also gaining share in the domestic market. In contrast, HMCL’s domestic wholesale share has slipped, and Bajaj Auto has lost export share.
In passenger vehicles, MM has climbed to the #2 position in the first half of the fiscal, even as Maruti Suzuki and Hyundai have come under pressure in recent years. Jefferies expects TVS and Eicher Motors to keep gaining share in two-wheelers, while M&M strengthens its position in PVs in the coming years – although it flags tightening emission norms while maintaining profitability as a key risk for M&M.
The report also tracks India’s gradual EV transition. In electric two-wheelers, Ola’s share has slipped sharply from 35% in FY24 to 15% in the first nine months of FY26 (December: 9%), while TVSL now leads at 23% followed by Bajaj Auto at 20%; Ather and Hero MotoCorp have also gained share in FY26. In electric passenger vehicles, TMPV remains the leader, though its share has fallen from 71% in FY24 to 39% in the aforementioned time period, while MG and M&M have risen to 28% and 21% respectively.
Valuations, Jefferies notes, are not cheap after the strong 2022–25 rally, but it argues that premium multiples should sustain for rising franchises.
Jefferies sums up its stance with a clear preference for “rising franchises.” It maintains ‘hold’ on Maruti Suzuki, Ashok Leyland and Bajaj Auto, and has ‘underperform’ on Hero MotoCorp, Hyundai and Tata Motors PV. Among auto component companies, it has a ‘buy’ call on Belrise, Motherson and Sona Comstar, and ‘underperform’ on Bharat Forge.
