Citi expects macro tailwinds to drive Indian auto sales in 2026, top picks include Maruti, M&M

Citi expects macro tailwinds to drive Indian auto sales in 2026, top picks include Maruti, M&M

Macro factors, including GST, interest rate cuts and income tax restructuring, will continue supporting Indian auto sales in 2026, Citi said in a note.

The brokerage sees car sales rising 5.1% in FY26 and 5.2% in FY27, annual two-wheeler sales up to March 2026 are seen growing 5.5% and 7% the following year.

Car market leader Maruti Suzuki is Citi's top pick, followed by Mahindra & Mahindra and Hyundai Motor India.

However, the automakers' gross margins are likely to dip in 2026 as they navigate segment competition as well as rising costs after a stable 2025, said Citi.

The brokerage added uncertainty around geopolitics and global demand a negative for Jaguar Land Rover owner Tata Motors Passenger Vehicles as well as auto parts makers.

Regulations on emissions are a key monitorable in 2026, said Citi.

Nifty Auto index rose 21% so far in 2025, outperforming blue-chip Nifty 50 index's 10% climb.

The shares of automakers and auto component manufacturers dropped in trade on December 15, pushing the Nifty Auto index down nearly 1 percent. The index has snapped a two-session gaining streak due to multiple key factors.

The Nifty Auto index fell 0.91% to 27,568.10.

Last week, Mexico imposed 50% tariff on Indian goods. The Mexican Senate approved a new tariff regime effective January 1, 2026, targeting imports from countries without a free trade agreement (FTA) with Mexico, including India, China, South Korea, Thailand, and Indonesia.

Mahindra & Mahindra (M&M) shares were the top losers on the index today, falling nearly 2% to close at Rs 3,609.70 per share. Royal Enfield-maker Eicher Motors also fell around 2%.