Carmakers Enter FY27 with a Stronger Growth Outlook than Two-Wheeler Makers

India’s passenger vehicle makers are entering FY27 with a stronger growth outlook than two-wheeler manufacturers, highlighting the widening gap between the country’s resilient SUV-driven car market and a slower, more uneven recovery in motorcycles and scooters. Commentary from leading listed automakers following their March-quarter earnings suggests most passenger vehicle companies are targeting double-digit growth this fiscal year, supported by new model launches, production capacity expansion and sustained demand for utility vehicles.

Two-wheeler manufacturers, by contrast, are largely guiding for modest single-digit growth, with profitability hinging on exports, selective price hikes and tighter cost management amid fragile rural demand and intensifying competition.

“The demand momentum holding up in double digits growth YoY in 1HFY27 is necessary for our full year growth estimates of 6-8% for PV and 2W industry to be met, as high base catches up in 2H. The impact on demand post the likely fuel price increase will be keenly watched, and as a result companies' ability to guard their margins owing to commodity increase. EV momentum in 2W and PV though is likely to receive a boost. Hence, PV players’ growth guidance for FY27 has been more optimistic than two-wheeler makers till now,” Jay Kale of Elara Securities said. 

Among passenger vehicle manufacturers, Maruti Suzuki India has guided for around 10% domestic growth in FY27, although the company remains cautious on exports amid geopolitical uncertainty. Mahindra & Mahindra has emerged among the most bullish, projecting 15-18% growth in its utility vehicle business this fiscal. The company has also guided for around 5% growth in the tractor industry and high single-digit expansion in the light commercial vehicle segment. Hyundai Motor India expects 8-10% growth across domestic and export markets, aided by new product introductions and ongoing capacity expansion.

The tone from two-wheeler companies has been relatively restrained. Hero MotoCorp expects industry growth in high single digits in FY27, while Bajaj Auto sees motorcycle industry growth of around 7-9% in the near term. Bajaj management also indicated that demand momentum slowed in April as the industry moved onto a higher base.

In the farm equipment segment, Escorts Kubota has projected a flattish tractor industry outlook for FY27, with growth expected to moderate in the second half due to a high base and concerns around monsoon patterns.

Even as companies remain optimistic on volumes, supply-side constraints continue to remain a watchpoint.

Industry executives indicated that dealer inventory across segments is still relatively lean, suggesting OEMs could potentially produce and dispatch more vehicles if supply conditions improve further.

Executives across the industry have also flagged concerns around industrial gas availability following disruptions linked to geopolitical tensions in West Asia. While most automakers said production has not yet been materially impacted, companies acknowledged that prolonged gas supply disruptions could create pressure on manufacturing schedules and supplier operations if the situation escalates.

Commodity inflation also remains a near-term concern. Maruti Suzuki said its Q4 margins were impacted by adverse commodity trends and product mix, while Hyundai Motor India indicated that raw material pressures are likely to continue into the first quarter despite selective price increases. Mahindra & Mahindra acknowledged a challenging supply-chain and commodity environment, though it noted that semiconductor-related disruptions have largely stabilised.

Elara Securities believes two-wheeler makers could still be relatively better positioned on margins in Q1FY27 compared to passenger vehicle companies, aided by recent price hikes, export strength and currency tailwinds. “Two-wheeler players’ resilience to margins in Q1FY27 on a QoQ basis is expected to be much more than PV players,” Kale said.

Most OEMs have already taken calibrated price increases over the past few months to offset rising input costs, although several management teams indicated that pricing alone may not fully neutralise inflationary pressures.

However, automakers remain watchful about supply-chain risks among others, as the industry enters another year of expansion.