The festive season is likely to bring more customers to automobile showrooms, but the numbers may not tell the whole scenario. Retail demand is growing across passenger vehicles, two-wheelers, tractors and commercial vehicles. However, a higher base from last year, production constraints and export challenges could change the pace of growth.

According to the Motilal Oswal report, September 2026 is expected to see double-digit retail growth across all major auto segments. The brokerage has identified Maruti Suzuki, TVS Motor Company and Mahindra & Mahindra as its top original equipment manufacturer (OEM) picks. Among auto component companies, it prefers Happy Forgings, Motherson Sumi Wiring India, Samvardhana Motherson International, Suprajit Engineering and Tenneco Clean Air India.

Which segments could see momentum slow down? Let’s take a look –

Passenger vehicles: Festive demand takes centre stage

Passenger vehicle demand remains one of the key areas to watch as the festive season approaches. According to Motilal Oswal, retail sales are expected to grow around 20% in September.

The four listed passenger vehicle manufacturers are expected to record combined wholesale growth of 18.2% year-on-year.

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Maruti Suzuki and Tata Motors Passenger Vehicles are expected to outperform the industry with double-digit growth. Maruti Suzuki is likely to benefit from its order backlog, low dealer inventory and additional production capacity at Kharkhoda and Gujarat.

Tata Motors Passenger Vehicles could get support from its newer models and electric vehicle portfolio.

According to the brokerage report, “Maruti Suzuki India and Tata Motors Passenger Vehicles are expected to outperform the industry with double-digit growth, given a healthy order backlog and lean channel inventory.”

Mahindra & Mahindra, meanwhile, could face production limitations despite healthy demand and waiting periods.

Two-wheelers: Strong retail, but production is a constraint

Two-wheeler demand is also showing strength. Retail growth is expected to remain in double digits in September. But wholesale growth may remain flat.

TVS Motor Company is expected to stand out among the major two-wheeler players, with exports supporting its volumes.

The Motilal Oswal report stated that, “TVS is expected to be the clear outperformer, with double-digit growth driven by strong export volumes.”

Royal Enfield could remain constrained by production capacity, while Bajaj Auto’s growth is expected to be supported by exports.

Commercial vehicles: Freight activity keeps demand firm

According to Motilal Oswal, commercial vehicle retail growth could be around 30% in September.

The three leading commercial vehicle manufacturers are expected to record aggregate dispatch growth of around 25%, despite a higher base.

This segment could therefore remain an important support for overall auto volumes.

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Tractors: Can the growth momentum continue?

Tractors are facing a different challenge. The segment benefited from the lower base created after the Goods and Services Tax (GST) rate cuts. But that advantage is now beginning to fade.

The brokerage expects tractor wholesales for the two listed players to decline 31.4% year-on-year in September.

The Motilal report pointed out that, “growth rates are expected to taper off as the base catches up from Sept’26.”

Weather could add another layer of uncertainty. Erratic rainfall and the ongoing El Nino weather pattern could weigh on demand during the second half of the year.

What is Motilal Oswal watching out for?

The brokerage expects growth rates to moderate as the favourable base effect fades. Commodity inflation could also affect near-term earnings for the auto sector stocks. However, price increases, potential normalisation of raw material costs in the second half and sustained volumes could remain important factors going forward.

Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.