The automobile sector is expected to see sustained demand momentum in June 2026, with two-wheelers and passenger vehicles likely to post healthy double-digit retail growth on YoY, as per a report by Yes Securities Institutional Equities.The report said two-wheeler retail sales are expected to grow over 15 per cent year-on-year, supported by a favourable base. However, on a month-on-month basis, sales may see a mild decline of 2-3 per cent due to the impact of Adhik Maas-related purchase delays. It noted that retail sentiment across key regions remains stable, though slightly below March-April levels. Rural demand, however, remains cautious due to adverse weather conditions, higher fuel costs and recent price increases, which are impacting entry-level purchases.It noted, "underlying traction remained intact especially in >125cc category both in ICE scooter and motorcycle segments." Likewise, passenger vehicle (PV) will likely grow in healthy double digits supported by a sharp post-Adhik Maas rebound and strong traction from new launches, according to channel checks.The report noted improved footfalls across regions, with South India reporting healthy double-digit growth, while West and North India recorded high single-digit to early double-digit growth.Industry-wide price hikes of 0.5-1.5 per cent were implemented across major OEMs in June 2026, marking the second increase in Q1 FY27, as companies passed on rising input costs.Electric vehicle (EV) demand remained strong month-on-month, driven by fuel cost concerns and new launches, with inquiries and bookings rising 15-20 per cent, the report said.Meanwhile, for the tractor segment, retails remained stable in June 2026, with volumes expected to stay strong in Q1 FY27, growing 23-24 per cent year-on-year, but likely to moderate later in the year. The outlook is influenced by "steep price hike of ₹12-12.5k/unit implemented in Apr'26 and a further hike of similar amount expected by Aug-Sep'26. 2) Low subsidy linked volumes as one-time subsidies available from state of Maharashtra (30-35k units) and Punjab (12-13k) which aided volumes in FY26, will no longer be available in FY27," the report said.Published on June 29, 2026