Best Auto Sector Stocks to Buy

As India enters 2026, its automobile industry stands as the third-largest in the world, with around 5.5 million units, having overtaken Japan and trailing behind the U.S. (~16 million units) and China (~30 million units). India’s automobile industry remains a cornerstone of its explosive economic growth, from a fragile five to the fastest five. The Indian automobile industry is being led by rising upper-middle-class income & SUV aspirations, rural demand recovery, and policy support, including RBI rate cuts, GST rationalisation (from 28% to 18% tax for automobiles) & targeted EV subsidies.

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Looking ahead, India’s automobile sector is set to grow around 6-8% in 2026, led by a compelling narrative of economic resilience, innovation and sustained expansions. Nifty Auto outperformed the broader Nifty Index in 2025 (23% vs 10%). The automobile sector is expected to maintain the sustainable, robust growth momentum with 6-8% top-line growth to reach $300 billion milestone by 2026, led by rising discretionary consumer spending, targeted policy support (monetary & fiscal) and an inevitable transformation towards EV (electric vehicles).

Like all other major economies, India is also providing various state subsidies like FAME (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles) and PLI (Production Linked Incentive) to promote EV & EV-related ecosystem, including charging infra. Overall, EV subsidy per vehicle now stands around INR 50000, including INR 30000 OER 2W (88% E-2W). The EV sector may continue to grow on falling battery costs, expanding charging infrastructure and policy support.

Potential Headwinds

• Very inadequate EV charging infra, lack of sufficient CNG pumps, high cost of petrol & diesel and that too Ethanol blended-causing engine & other parts problems & higher maintenance cost
• Overall higher cost of compliance/cost of maintaining a vehicle for middle-class-like higher insurance/road taxes/toll fees, etc.
• Potential economic slowdown, weak labour market, high youth unemployment/under-employment rate, and higher cost of living (affordability issues) may affect discretionary consumer spending and automobile sales

But the overall long-term outlook remains robust amid India’s low automobile penetration and increasing aspirations of the middle class.

1) Maruti Suzuki India Ltd.

India’s leading PV manufacturer, Maruti, still holds over 40% market share (vs 50% a few years ago) despite intense & growing competition. Maruti’s focus on affordable SUVs, hybrids, EVs and various upcoming models like Victoris and e-Vitara - it remains a bright spot of the Indian PV (Personal Vehicles) segment-positions itself for the eventual green transformation. Also, smaller budget models like Wagon-R, Swift, Alto, S-Presso, etc, remain very popular. This, along with a wide service network and reasonable cost & availability of spare parts, Maruti remains the undisputed #1 in India’s automobile space (PV). Maruti’s ongoing launch of new models and potential top/bottom line growth, along with core operating margin expansion from GST recalibrations, remains one of the top picks in India’s automobile sector.

2) Tata Motors Ltd (TMPV)

Tata Motors Passenger Vehicles (TMPV) is now India’s 2nd biggest automobile company in terms of market share (~15%). TMPV is set to dominate the Indian EV market in 2026 with potentially 6-10 new models, while the JLR subsidiary adds premium global exposure. Overall domestic commercial (CV) and passenger (PV) segments recover. Improving EV economics through localisation further strengthens its outlook as it holds ~40% market share in EVs. Also, SUVs are gaining traction along with the LCV and MCV segments.

3) Mahindra & Mahindra Ltd. (M&M)

M&M is India’s 3rd largest automobile company (PV) with a market share of ~14%, led by SUVs, EVs and tractors. M&M has a plan to launch multiple new models gradually through 2030.-in line with its marketing strategy to focus on urban premium mobility, rural demand recovery and revenue visibility. Various SUV models: XUV, Thar, Scorpio and other SUVs are expected to perform well amid various state elections in 2026. A key beneficiary of rural demand recovery and a busy political calendar in India around the year (General/State/Local elections), M&M may continue its robust performance in 2026 too.

4) Hyundai Motor India Ltd. (HMIL)

HMIL is India’s 4th largest PV Company with a market share of ~ 14%. Hyundai remains a strong brand in Indian PV, renowned for its innovation, especially in the dominant SUV EV segment (models like Creta, Venue, and Exter). HIL has a resilient market share in both local and global exports.

Top 2W Stocks to Watch in 2026-Two Wheeler

1) Hero MotoCorp (~35% market share)

Hero MotoCorp is India’s largest two-wheeler (2W) company, having ~35% of market share. It dominates India’s daily commuter segment with a strong rural market share (iconic brands like Splendour). For 2026, Hero Moto may benefit from GST recalibrations (cuts), revival of rural demand and a busy election calendar. It has an export share of around 6.5%.

2) TVS Motor Company (~17-18% share)

TVS Motor is India’s 3rd largest 2W company with a local market share of ~18%, followed by Honda Motorcycle & Scooter ~25%)-an unlisted entity. TVS is growing fast in the premium scooters & EV segment with models like (iQube. In 2026, TVS will focus on EVs, aiming for 25-30% of overall revenue. It has a 25-27% export share. Expect sustained double-digit growth and margin expansion in 2026.

3) Bajaj Auto Ltd.

Bajaj Auto is India’s 4th largest 2W company with a market share of ~15%; it focuses on exports with a market share of ~45%; it has iconic brands like Pulsar, Chetak EV and Platina. Bajaj’s balancing of local & global operations (domestic & exports) ensures steady revenue even during a recession. A stable two-wheeler giant with strong exports, Baja also benefits from rural recovery and electric models like the Chetak. Its predictable growth and margin strength make it a defensive play in the segment.

Commercial Vehicle (CV) Companies in India

In India, a country of 1,5 billion people, public transportation is key. India’s commercial vehicles market was around 957K units in FY25; although it recorded a slight decline, but also saw a strong recovery in late 2025. The CV segment is dominated by trucks (LCV, MCV and HCV), and buses (traditional & EV). The CV market is now gaining traction due to the infra push, e-commerce and logistics tailwinds.

1) Tata Motors Ltd. (CV)-TMCV

TMCV is India’s largest (#1) player in the CV market with ~35% market share; it’s the undisputed leader across LCV, MCV, HCV, also SCV with brands like Ace, Sigma and Prima. TMCV is also a beneficiary of India’s PLI scheme, infra and EV push. TMCV also has a solid share of MCHV buses, ~25%.

2) Ashok Leyland Ltd. (ASL)

ASL is the 3rd largest in India’s CV market with an overall market share of ~18% led by MHCV buses and trucks.’ Has almost 35% market share (public transport, intercity, staff, and schools); exports share ~12% led by GCC/Africa/SAARC countries. Expect robust momentum in 2026, too, amid the EV push.

Conclusion: A Promising Road Ahead

India’s automobile sector presents a promising road ahead in 2026, led by EV transitions, premiumisation, and several structural tailwinds, including increasing export potential amid the China + One theme.