The Indian automotive sector delivered a high-octane performance to close out 2025, with the BSE Auto Index hitting an all-time high of 63,186.99 on January 1, 2026. This market rally was fuelled by robust December sales dispatches, where a structural shift toward premium SUVs and a resurgence in rural demand—bolstered by recent GST rate restructuring—drove double-digit growth for industry leaders. Investors responded with a wave of buying, pushing stocks like Mahindra & Mahindra and Ashok Leyland toward fresh record peaks as the sector continues to outperform the broader Nifty 50.
Market leader Maruti Suzuki set a towering benchmark, reporting a 22.2 per cent surge in total December sales to 2,17,854 units. While its export volumes saw a slight decline, the domestic market remained exceptionally strong, with compact cars and utility vehicles leading the charge. This performance pushed the company’s annual sales past the 2.35 million unit mark for the first time in history. Consequently, the stock maintained its steady upward trajectory, reflecting the company’s success in capturing the evolving demand for "premiumized" entry-level vehicles.
Mahindra & Mahindra (M&M) emerged as a top pick for analysts, with its stock climbing 1.47 per cent to Rs 3,764 following a stellar 25 per cent YoY jump in total vehicle sales (86,090 units). The company’s SUV division clocked its highest-ever volumes, crossing the 50,000-unit mark in a single month. Beyond passenger vehicles, M&M’s farm equipment business also reported a massive 37 per cent growth in tractor sales, driven by improved rural cash flows and favourable crop yields. This multi-segment dominance has solidified M&M’s position as a preferred heavyweight play in the auto sector.
Bajaj Auto showcased remarkable resilience, with its share price reaching a 52-week high of Rs 9,585. The company reported total monthly volumes of approximately 3.8 lakh units, marking an 18 per cent YoY growth. While domestic motorcycle registrations saw a slight seasonal dip, the company’s "Chetak" electric scooter became a major growth engine, recording 270,000 registrations for the full year—a 40 per cent jump. Investors are particularly bullish on Bajaj’s ability to scale its EV portfolio while maintaining industry-leading margins through its premium Pulsar lineup.
Tata Motors continued its record-breaking streak, marking its fifth consecutive year of peak annual sales with 587,218 units. In December, its passenger vehicle segment grew 14.1 per cent to 50,519 units, while its commercial vehicle arm posted a robust 25 per cent domestic growth. The company remains the undisputed leader in the electric car space, with EV sales surging 24 per cent in December alone. Despite some volatility in the parent stock due to global subsidiary concerns earlier in the year, the newly spun-off CV business has gained 28 per cent since listing, offering a clear value-unlocking narrative for shareholders.
Looking toward 2026, the auto sector is entering a "supercycle" supported by infrastructure spending and the "PM E-DRIVE" scheme. Brokerages remain overwhelmingly positive, citing healthy inventory levels—currently at less than 30 days—and the impact of GST 2.0 as permanent tailwinds for demand. As companies prepare for modest price hikes in January, the record December numbers have provided a massive cushion for Q4 earnings, ensuring that auto stocks remain at the forefront of the Indian market’s growth story.
Disclaimer: The article is for informational purposes only and not investment advice.
Bulls in the Driver’s Seat: Auto Stocks Rally as December Sales Hit Record Highs