OEM margins may be under pressure in H1 '27

New Delhi: India's automobile industry is expected to maintain healthy demand across vehicle segments, but automakers are likely to face pressure on profit margins in the first half of FY27 before profitability improves in the second half, according to an Antique Stock Broking monthly sector report.The brokerage said robust wholesale dispatches across passenger vehicles (PVs), commercial vehicles (CVs) and tractors indicate demand remains resilient, even as cost pressures are expected to weigh on original equipment manufacturers (OEMs) in the near term.Also read: Delayed monsoon may weigh on auto demand, but long-term outlook stays strong: Aditya Shah"OEM margins to remain under pressure in the near term, particularly during 1HFY27, before normalising in 2HFY27.

Demand is expected to remain resilient in the premium segment, while the mass-market vehicle segment may witness moderation in 2HFY27.

Also, export demand to regain growth momentum on the back of normalisation in geopolitical scenarios," the report said.According to the monthly report, domestic passenger vehicle wholesales rose 23 per cent year-on-year in the first quarter of FY27, while retail sales increased 22 per cent.

Domestic commercial vehicle and tractor wholesales also remained strong, growing 20 per cent and 19 per cent, respectively, during the quarter.

In June alone, domestic passenger vehicle wholesale dispatches increased 22 per cent year-on-year, while commercial vehicle wholesales surged 30 per cent.The report said demand is likely to remain healthy for premium vehicles, while the mass-market segment could witness some moderation in the second half of the financial year.

It also expects exports to recover as geopolitical conditions stabilise.Among passenger vehicle manufacturers, Tata Motors and Mahindra & Mahindra outperformed in June, posting wholesale growth of 69 per cent and 33.5 per cent year-on-year, respectively.

Maruti Suzuki recorded 21 per cent growth, while Hyundai reported a 10 per cent decline after a fire at one of its supplier's manufacturing facilities disrupted production.

Toyota, JSW MG and Kia also reported positive growth during the month.Commercial vehicle demand also remained robust, with strong growth in medium and heavy commercial vehicle truck volumes across major manufacturers.

In the tractor segment, domestic volumes grew 13.5 per cent year-on-year, supported by continued government measures, although the report cautioned that emerging El Nino conditions remain a near-term risk for the rural economy.The brokerage also highlighted continued momentum in electric vehicles.

Retail sales of electric passenger vehicles rose 91 per cent year-on-year in June, while electric two-wheeler sales increased around 68 per cent.

In the electric two-wheeler market, TVS Motor held a 24 per cent market share, followed by Bajaj Auto at 22 per cent and Ather at 16 per cent, while Ola Electric's market share declined to 8 per cent from 19 per cent a year earlier, according to Vahan data cited in the report. ...