The Indian auto market ended 2025 on a high note, with the Nifty Auto index up about 22% thanks to cheaper vehicle taxes and solid domestic demand.
Why the sector surged in 2025
In September 2025 the government cut GST on cars and bikes. Lower prices sparked a wave of enquiries and bookings, pushing the index ahead of the broader market. Rural sentiment improved, monsoons were good, farm incomes rose and the government increased spending on roads and other projects.
Recent performance snapshot
- 1‑year gain: +20%
- 6‑month gain: +15%
- 3‑month gain: +5%
- 1‑month gain: +0.5%
Top winners and laggards
Only four stocks in the index were down year‑to‑date. The biggest gainers were:
- Ashok Leyland: +60%+
- Eicher Motors, Maruti Suzuki, TVS Motor: each +50%+
- Hero MotoCorp: +37%
- Mahindra & Mahindra, MRF, Samvardhana Motherson: each +15%+
The biggest drags were Tata Motors and Balkrishna Industries, both down about 20%.
Demand outlook for FY 2026
Analysts see steady growth across all vehicle types:
- Passenger cars: ~7% growth, led by SUVs and higher‑spec models.
- Two‑wheelers: 6‑10% growth, helped by rural recovery and replacement buying.
- Electric vehicles (EVs): faster adoption as battery costs fall, more local production and new model launches. Maruti Suzuki’s first mass‑market EV, expected early 2026, could be a key catalyst.
What investors might consider
Experts suggest a balanced, selective approach rather than betting on the whole sector:
- Large‑cap stable pick: Maruti Suzuki – dominant market share, strong balance sheet, expanding product line.
- Growth‑oriented mid‑caps: companies with SUV‑focused portfolios and improving margins.
- Two‑wheelers: Bajaj Auto and TVS Motor benefit from exports and premium models.
- Commercial vehicles: Ashok Leyland and Tata’s CV business stand to gain from infrastructure projects and defence orders.
- Auto ancillaries: selective exposure to firms like Bosch, Bharat Forge and Balkrishna Industries that have technology advantages and export exposure.
Technical picture
The Nifty Auto index is trading around 27,900, close to its all‑time high of 28,099. It sits above its 20‑day, 50‑day and 200‑day moving averages, indicating continued bullish momentum.
Analysts see buying interest near the 27,000 level, with a short‑term range of 27,000‑28,000 and a broader band of 26,500‑29,000 shaping the next moves.
Bottom line
Strong tax cuts, improving rural demand and heavy government spending have set a solid base for the auto sector. While growth may temper from the post‑COVID surge, the mix of stable large‑caps and upside‑focused mid‑caps could offer retail investors a balanced play in 2026.
Remember, this is perspective, not a prediction. Do your own research and consult a qualified advisor before making any investment decisions.