New Delhi, May 2 (IANS) India’s auto sector saw a demand‑led but uneven recovery in FY26, driven by urban market demand and premiumisation while rural demand saw some headwinds, a new report has said.

The report from Deloitte India said two‑wheelers led the recovery, with wholesale volumes up 10.7 per cent year‑on‑year and retail sales rising 13.4 per cent.

Passenger vehicles continued the premiumisation trend, with mid-size entry segments gaining share and traditional entry-level segments getting weakened.

Commercial vehicles entered a goods-led upcycle, growing roughly 12.6% YoY, supported by infrastructure activity and replacement demand.

“EV adoption is accelerating but remains uneven, with strong growth across segments but limited penetration due to cost economics and infrastructure gaps,” the report said.

The two-wheeler market saw a strong shift to premium motorcycles (up 40.7 per cent) and stronger scooter demand (up 18.5 per cent). Electric two‑wheelers grew 21.8 per cent but overall EV penetration rose only modestly to 6.5 per cent as price and infrastructure gaps kept many buyers tied to internal combustion engine models, the report added.

In EV adoption, Kerala led with 14.1 per cent penetration, Karnataka and Odisha showed deepening adoption, while Maharashtra’s share declined to 9.2 per cent despite higher volumes as ICE demand rebounded.

“Following pricing resets and effective GST rationalisation in H2 FY2026, affordability in the sub-350cc motorcycles reduced prices meaningfully, collapsing long-standing price gaps with commuter bikes,” the report said.

Entry-level demand remained under pressure in the overall automobile sector, while urban markets anchored growth through premiumisation and feature-led upgrades.

The business advisory firm highlighted policy tailwinds shaping the medium‑term outlook, such as the India–EU free trade agreement and new electric vehicle policy developments.

Passenger vehicles (PV) saw a disciplined wholesale recovery with strong retail growth, as consumers traded up within familiar price bands.

—IANS

aar/na