September Auto Sales Seen Strong as Festive Demand, Low Base Lift Volumes

India's automobile market is expected to close September with strong sales across passenger vehicles, two-wheelers and commercial vehicles, extending the momentum seen in July and August, according to brokerages.

The year-on-year growth numbers, however, are likely to be amplified by an unusually favourable comparison base. Vehicle purchases remained subdued for much of September 2025 as buyers waited for lower GST rates that took effect on September 22, before sales accelerated sharply with the start of Navratri.

Nomura expects passenger vehicle wholesales to grow about 21% year-on-year to around 4.63 lakh units in September, while PV retail sales are estimated at around 4.05 lakh units, up 26%. The difference between wholesale and retail could add about 58,000 vehicles to dealer inventory during the month, according to the brokerage.

"Dealer surveys suggest strong demand continuing in Sep-26, with broad-based retail growth across segments," Nomura said in its report.

YES Securities also expects demand to remain firm but has a more moderate retail estimate, forecasting 15-16% growth in passenger vehicle retail sales in September. It said updated product portfolios and steady consumer demand were supporting the market despite selective vehicle price increases.

The forecasts come after a strong August, when passenger vehicle wholesales rose 36.5% to 4,39,309 units, the highest ever for the month, according to the Society of Indian Automobile Manufacturers. Two-wheeler dispatches increased 10.5% to 20,34,698 units, while three-wheeler sales rose 22.8% to 93,764 units.

Retail demand was also firm in August. Overall vehicle registrations rose 18% to a record 24.23 lakh units in August. PV retail increased 16.14% to 4,02,398 units, while two-wheeler sales rose 19.69% to 17,14,610 units and commercial vehicle registrations grew 14.45% to 90,769 units, according to FADA data.

PVs Seen Leading September Growth

Passenger vehicles are expected to remain one of the strongest segments in September. Nomura estimates Maruti Suzuki's domestic PV wholesales, excluding OEM supplies and light commercial vehicles, at around 1.85 lakh units, up 39% year-on-year.

Mahindra & Mahindra's utility vehicle volumes are expected to rise about 12% to 63,000 units, while Tata Motors' domestic PV sales are forecast at around 65,000 units, up 9%. Hyundai Motor India's domestic sales are estimated at 57,000 units, an increase of 11%.

The forecasts follow a strong August for several manufacturers. Tata Motors' domestic PV volumes rose about 59% to 65,200 units, M&M's utility vehicle sales increased around 50% to 59,000 units, and Hyundai's domestic volumes rose 44% to about 54,400 units, according to Nomura's review of August sales.

The industry had already entered the quarter with strong momentum. SIAM reported July PV sales of 4,57,810 units, up 34.3% year-on-year, followed by another record month in August.

Maruti Suzuki expects the domestic PV market to reach around 5.3-5.4 million units in FY27, compared with 4.64 million units in FY26, supported by improving affordability and demand.

September Base Needs to Be Read Carefully

Analysts are cautioning against interpreting September's headline year-on-year growth figures without accounting for the unusual base.

Choice Institutional Equities said vehicle registrations recorded on VAHAN between September 1 and 23 were running 81.8% above the corresponding period last year. PV registrations were up 102.5%, two-wheelers 91.6% and commercial vehicles 51%.

But the brokerage expects full-month growth to moderate to around 30%, after normalising for the distortion created by September 2025. "The 81.8% YoY growth in retail registrations during 1-23 September is significantly distorted by the low base," Choice analyst Subhash Gate said.

Last September was an unusual month for the industry. Customers postponed purchases during the first three weeks as they waited for GST 2.0 rates to take effect on September 22. Registrations subsequently jumped during the final week as the tax cuts coincided with Navratri.

FADA data showed overall vehicle retail increasing just 5.22% to 18,27,337 units in September 2025. PV retail stood at 2,99,369 units, up 5.8%, while two-wheelers rose 6.51% to 12,87,735 units and commercial vehicles increased 2.66% to 72,124 units. SIAM's wholesale numbers showed passenger vehicle dispatches at 3,72,458 units in September 2025, up 4.4%, while two-wheeler wholesales grew 6.7% to 21,60,889 units.

The comparison base is particularly weak during the first three weeks. Choice estimates that the final seven days accounted for around 46% of September 2025 registrations, almost twice the typical 24-25% contribution of the month's final week.

Two-Wheeler Retail Seen Outpacing Wholesale

The gap between retail and wholesale growth could be particularly visible in two-wheelers. Nomura expects industry two-wheeler wholesales to rise just 6% to about 23.13 lakh units, while retail sales are forecast to increase 35% to around 18.14 lakh units.

At the manufacturer level, TVS Motor's overall volumes are expected to grow around 21%, while Bajaj Auto's sales are estimated at 5.70 lakh units, up about 12%. Hero MotoCorp is expected to report around 7.15 lakh units, an increase of 4%.

YES Securities' channel checks point to a difference between urban and rural demand. It estimates urban two-wheeler retail growth of around 15%, compared with 8-10% in rural markets, where erratic rainfall and calendar effects have moderated demand. That contrasts with August, when FADA reported two-wheeler retail growth of 19.69%, with rural demand increasing 20.25% and urban sales 19.07%.

Electric two-wheelers remain another growth driver. Nomura estimates September e-two-wheeler sales at about 2,05,500 units, up 87% year-on-year. The segment had already crossed an important threshold in August, when electric two-wheelers accounted for 10.68% of total two-wheeler retail, according to FADA.

CVs Expected to Maintain Momentum

Commercial vehicles are also expected to continue their recent recovery. Nomura forecasts medium and heavy commercial vehicle wholesales at around 42,300 units in September, up 25%, while retail sales are expected to rise 41% to 39,300 units.

The forecast follows a strong August. FADA reported CV retail of 90,769 units, up 14.45%, while major manufacturers posted considerably stronger wholesale growth. Tata Motors' domestic CV sales increased 33% in August, while Ashok Leyland's volumes rose 43%, supported by freight demand, infrastructure activity and fleet replacement.

YES Securities said inquiry pipelines remain healthy despite the normal seasonal softness seen in September. Dealers are also rebuilding inventories from around 20-22 days towards 30 days ahead of expected price increases of 1-2% in October.

Tractors the Outlier

Tractors are likely to be the weakest major automotive segment during September. Nomura expects tractor wholesales to fall about 21% year-on-year, citing the shift in festival dates and a high base of last year.

YES Securities is less bearish on retail but expects growth to be flat to low single digits, with rainfall deficits across parts of northern and eastern India weighing on rural sentiment.

The weakness was already becoming visible in August. While overall vehicle retail increased 18%, tractor registrations were nearly flat, growing only 0.84%.

The divergence comes even as rural demand in other vehicle segments has remained relatively resilient. Rural PV retail rose 24.9% in August, compared with 10.9% growth in urban areas, while rural CV growth also outpaced cities.

Inventory Builds Ahead of Peak Festive Period

One factor to watch in September will be the balance between factory dispatches and showroom sales. In August, PV wholesales rose 36.5%, more than twice the 16.14% growth in retail sales. Dealer inventory subsequently increased by around five days to 38-40 days, according to FADA.

Nomura's September forecast again puts PV wholesale volumes above retail, implying another roughly 58,000-unit addition to channel stock during the month.

The build-up is partly seasonal, as manufacturers and dealers prepare for the peak festive buying period. Inventory nevertheless remains a key indicator to watch if wholesale growth continues to outpace registrations.

The situation is considerably better than a year ago. By the end of September 2025, PV inventories had climbed to around 60 days as dealers stocked for Diwali following three weeks of subdued sales caused by GST-related purchase deferrals.

Demand Strong, Costs Emerging as Next Risk

The immediate demand picture remains supportive, with festival buying, lower borrowing costs, product launches and the affordability gains from last year's GST changes sustaining customer interest.

YES Securities said auto retail remains in double-digit growth across most segments, although uneven rainfall is emerging as a risk.

Nomura said recent OEM price increases had so far not materially affected demand, but warned that rising steel, copper and crude prices could keep input-cost pressure elevated and trigger further vehicle price hikes. The brokerage expects growth rates to moderate in the second half of FY27 as the industry begins comparing against the stronger sales base created after GST 2.0 took effect last year.

For September, however, the combination of festive demand and a weak comparison month is expected to keep headline growth strong. The more important indicators will be how much of that strength comes through in retail rather than factory dispatches, and whether dealer inventories remain under control as the industry moves into the peak Diwali selling period.