Domestic automobile companies will release their wholesale numbers for the month of February next week, with analysts expecting double-digit growth across segments, as they believe that the strong on-ground retail demand momentum that started after the GST rate cuts has continued through this month.
Domestic brokerage firm Motilal Oswal expects demand could be led by improved consumer sentiment, which has, in turn, been driven by improved affordability.
The brokerage expects two-wheelers (2Ws), passenger vehicles (PVs), commercial vehicles (CVs), and tractors to post 25%, 18%, 26%, and 39% growth in wholesale volumes in February compared to the same period last year.
Tata Motors to outperform the market
Among passenger vehicles, it anticipates strong growth for Tata Motors PV segment, with new launches such as the Sierra and the Punch EV expected to drive sales to 67,205 units, which is 43.6% higher than the same period last year.
The brokerage also sees Mahindra & Mahindra to post a 25.7% YoY jump in sales to 1,37,329 units, boosted by the new launches of the XUV 7XO and the XEV 9S, as well as strong demand for its EVs.
For Maruti Suzuki, it projects sales to be capped by capacity constraints, even as demand for its SUVs continues to remain healthy, along with very strong momentum visible in exports. It estimates the country’s largest PV maker to report a 12.4% YoY growth at 2,24,066 units.
Hyundai Motor’s wholesales are expected to improve by 13.5% YoY to 66,654 units, which are likely to be driven by strong demand for the new Venue and robust exports.
2-Wheelers seen outperforming PVs
Like passenger vehicles, Motilal Oswal expects two-wheelers to post strong numbers, even better than PV growth, aided by a relatively low base.
Within OEMs, Motilal Oswal expects Eicher Motors’ Royal Enfield dispatches to increase 16% YoY to 1,05,193 units, while TVS Motor is seen rising 24.6% YoY to 5,03,222 units.
Hero MotoCorp and Bajaj Auto are expected to report 28.2% and 23.5% growth in wholesale dispatches to 4,97,600 units and 4,34,950 units, respectively.
On the back of a pickup in freight demand, peak utilization levels, and improved affordability, demand momentum in CVs has also been strong, and the brokerage expects the top three CV OEMs to post around 26% aggregate volume growth for the month.
Further, tractors have also continued to see robust demand in February. Accordingly, it expects the top two OEMs to post about 39% YoY growth in tractor volumes in February.
Auto demand momentum likely to stay strong in the near term
Considering the pickup in demand, inventory levels are likely to remain lean at OEMs despite the expected wholesales push in 4QFY26. Thus, the brokerage expects the strong wholesales momentum to continue in the near term.
Maruti Suzuki is the brokerage’s top pick among auto OEMs, as it believes the new launches and the current export momentum are likely to drive healthy earnings growth. In two-wheelers, it remains positive on TVS Motor, driven by consistent outperformance, which it believes will help sustain its premium valuations.
It is also bullish on Mahindra & Mahindra, given the uptrend in tractors and healthy growth in UVs. In the auto auxiliary space, the brokerage’s top picks are Endurance Technologies, SAMIL, and MSWIL.
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