Auto Sector 2026: Demand Sustains, Premiumisation Drives Growth Amid Policy Boosts

• India's auto sector anticipates sustained demand and a premiumisation trend in 2026, following a volatile 2025.
• GST rationalisation in September 2025 significantly boosted demand, particularly for entry-level vehicles and commercial vehicles.
• Maruti Suzuki, Ashok Leyland, and Tata Motors saw strong recovery post-GST cuts, indicating broader market revival.
• Potential 8th Pay Commission implementation and higher Union Budget capital expenditure could further fuel demand in 2026.
• Key risks include rupee depreciation, which raises import costs, and rising commodity prices, leading to industry-wide price hikes.

Why It Matters: Auto sector eyes strong 2026 with sustained demand, premiumisation, and policy support despite risks.