Bank of America (BofA) has reaffirmed its confidence in Mahindra & Mahindra, Maruti Suzuki India, and Ashok Leyland as premier choices within the automotive sector. Despite a mixed performance in April revealed by recent channel checks and vehicle registration data, these companies continue to shine. Passenger vehicles are seeing a slight uptick in sales, while the two-wheeler market struggles, and commercial vehicles demonstrate signs of recovery.

Passenger Vehicles Show Steady Growth

In the latest insights from BofA, the passenger vehicle segment recorded a 2-3% increase in sales year-on-year for March and April. This modest growth can be attributed to several factors:

• Festive Demand: Maruti Suzuki benefited from the festive season, particularly during Navratri.
• Innovative Launches: Mahindra & Mahindra is gaining traction with its new battery electric vehicle models.

Looking ahead, BofA anticipates that the entire industry may only see 1-2% growth in the upcoming financial year unless new income tax incentives are introduced. While Mahindra is gaining market share, Tata Motors is lagging behind.

Two-Wheeler Market Stagnation

The two-wheeler segment is facing challenges, with a slight year-on-year decline noted in retail sales over March and April. Despite expectations for 7-8% growth in FY2026, financing hurdles and a tough comparison base are impacting performance. However, there are some bright spots:

• Premium Segments: Brands like TVS Motor and Eicher Motors are gaining market share in the scooter and premium bike categories.
• Eicher’s Performance: Eicher is expected to have sold 100,000 units in April.

BofA emphasizes that achieving robust margins in the March quarter will be crucial for both TVS and Eicher, which are striving for stock outperformance.

Electric Vehicle Adoption Declines

The electric vehicle (EV) segment faced a downturn, with adoption rates plummeting to just 5% in April, a 35% drop month-on-month following subsidy cuts. Major players such as Bajaj Auto, TVS, and Ola Electric continue to compete at the forefront of the e-scooter market.

Commercial Vehicles Gaining Momentum

On a brighter note, commercial vehicles are beginning to recover with a year-on-year increase of 696 units in medium and heavy vehicle registrations as of April. This uptick supports BofA’s assertion that the commercial vehicle market may have reached its lowest point. Key factors contributing to this recovery include:

• Decreased Diesel Prices: Lower operational costs are encouraging fleet growth.
• Stable Truck Rentals: Consistent rental rates are providing financial stability for fleet operators.

In agricultural machinery, tractor sales remain robust, buoyed by positive forecasts for the upcoming monsoon season. Ashok Leyland stands out as a strategic pick, bolstered by a favorable operational environment and an improving demand outlook.

In conclusion, while challenges remain in certain segments of the automotive industry, companies like Mahindra, Maruti, and Ashok Leyland are well-positioned for growth as they navigate the evolving market landscape.