After a record-breaking festive start for the automobile industry, experts are weighing in on whether the sector can maintain its momentum on Dalal Street.
The latest report from the Federation of Automobile Dealers Associations (FADA) shows historic sales during Navratri, backed by strong demand and the recent GST rationalisation. However, analysts believe that while the short-term growth looks impressive, the auto rally may soon stabilise as pent-up demand fades.
Dharmesh Kant, Head of Equity Research at Chola Securities, said that the current spike in auto sales needs to be understood in context.
“Yes, actually, first two have been clear on this report. The FADA report is two segments, one is for the month of September and one is for the 8-day period. So this 8-day period surge which you are seeing, there is also a pent-up demand of one month. I mean GST cut was announced on 15th of August, so many people deferred their sales and then they wanted to book on the Navratri period. Usually in a normal year this doesn't happen,” he said.
According to him, the 34–36% surge reported during the 8-day period should be read along with the one-month backlog that got added to the festive demand. “So adjusted to that, we have seen 6% retail sales growth which has happened,” he said.
He further explained that on a dealership basis, where sales are calculated from companies to dealers, the growth has been higher. “On dealership basis from company to dealers, it has been 12–15% kind of a growth. That is the number which has been reported by most of the two-wheelers and three-wheelers,” Kant added.
Looking ahead, he expects October to see moderate growth compared to September. “Going forward into October, we don’t think 10–12% is gettable because last year Navratri and Diwali were both in the month of October, so the base is already high. Let’s see what the number pans out, if it is 10%, it is good,” he said.
Kant believes that the auto sector’s current rally may have peaked for the short term.
“So auto I think is done with, I mean for the timing, for the short term they are built into the prices. We may see 3–5% kind of a movement based on the news flow but structurally the real movement will start happening from the month of January and February when we have seen normal December whether the sustainability or such kind of a rate is there or not,” he said.
He added that the real growth story in the coming months may shift towards sectors linked to infrastructure and public spending.
“Otherwise, I think structurally going into the budget session in the month of January and how government spending is happening, infra, building materials, railway, defence should be the key core driver and now since public sector banks are participating they should also drive the growth forward. So banks included in this basket,” he said.
According to analysts, the festive season and the GST rate cut have given the economy a short-term boost, but investors should now look beyond the auto sector for long-term opportunities. Infrastructure development, defence manufacturing, and capital goods are expected to benefit from rising public investment and policy focus in the upcoming budget session.
As the year-end approaches, experts suggest that the next phase of market growth may come from companies connected to India’s infrastructure push rather than consumer-driven sectors like auto. The market, they say, will now look for sustainability of demand beyond the festive period and how government spending shapes corporate earnings in early 2026.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
