India’s automotive industry is preparing to close 2025 with a significant performance surge, even as global markets face cooling demand. A new year-end outlook from Nuvama Institutional Equities reveals that the domestic market is on track for double-digit growth across virtually every category this December, signaling a powerful “decoupling” from the stagnation seen in the West.
The Resilience Narrative
While high interest rates have dampened car sales in Europe and North America, the Indian market is benefiting from a “perfect storm” of domestic catalysts. Nuvama analysts point to a strategic mix of GST reductions, aggressive OEM discounting, and a late-year interest rate pivot that has reignited the middle-class consumer.
“What we are seeing is not just a seasonal year-end push, but a fundamental resilience in the Indian consumer,” the report notes. Even with a slight dip in rural spending power due to lower crop prices, the industry is successfully pivoting toward premiumization to maintain its momentum.
Segment Performance Highlights
1. Two-Wheelers: The Volume Driver
The two-wheeler segment remains a standout, with industry volumes projected to grow 22% YoY in the domestic market.
TVS Motor: Expected to lead the category with a 29% jump in total volumes, reaching approximately 415,000 units.
Eicher Motors (Royal Enfield): Anticipated to grow 26%, with volumes hitting roughly 100,000 units.
Hero MotoCorp: Projected to see a 23% increase, aiming for 400,000 units.
Bajaj Auto: Forecasted at an 18% rise, totaling around 380,000 units.
2. Passenger Vehicles: SUV and EV Momentum
Domestic passenger vehicle sales are forecasted to rise by 21% YoY, driven by the ongoing SUV craze and heavy year-end discounting, particularly in the EV segment.
Mahindra & Mahindra (M&M): Expected to outperform with 29% growth (Auto division: ~90,000 units).
Maruti Suzuki: Eyeing a 23% increase, projected at 220,000 units.
Tata Motors (PV): Likely to post a 19% rise to 52,500 units.
Hyundai: Expected to grow at a more moderate 9% to 60,000 units.
3. Commercial Vehicles and Tractors
Commercial Vehicles (CV): Domestic growth is pegged at 17%. Improved freight availability and a shift from used to new vehicles are supporting this recovery. Ashok Leyland and Tata Motors (CV) are both expected to post 17% volume growth.
Tractors: Defying tepid rural sentiment, the tractor segment is expected to grow 14% YoY, aided by Maharashtra’s state subsidy schemes and the overarching GST benefits.
Report maintains a “constructive view” on the sector heading into the new year. Beyond domestic strength, exports are also expected to record double-digit growth, led by rising demand in Asia, Africa, and Latin America.
For investors, the brokerage identifies TVS Motor, Maruti Suzuki, and Mahindra & Mahindra as top picks, noting that while discounts have inched up sequentially, the improved scale and tax reforms are effectively protecting margins.
