India's automobile industry is expected to report strong sales growth in June, driven by sustained demand across passenger vehicles, two-wheelers, and commercial vehicles, according to a report by Nomura.

The brokerage estimates passenger vehicle wholesales to increase 26% year - on - year to around 401,000 units, while retail sales are projected at approximately 384,000 units, indicating a modest build-up in dealer inventory. Two-wheeler wholesales are expected to grow 18% year-on-year to about 1.87 million units, while medium and heavy commercial vehicle sales are forecast to rise 12% to around 33,000 units. Tractor sales are also expected to increase 7% during the month.

Nomura said demand momentum remains healthy despite recent fuel price and vehicle price increases. The brokerage also highlighted that electric vehicle adoption continues to accelerate, with EV penetration estimated at 7.4% in passenger vehicles and 10.5% in the two-wheeler segment during June.

Among passenger vehicle manufacturers, Maruti Suzuki is expected to report around 30% year-on-year growth in domestic sales. Mahindra & Mahindra's utility vehicle volumes are projected to rise 27%, supported by robust demand despite supply constraints.

Tata Motors is expected to register the strongest growth among major passenger vehicle manufacturers, with its passenger vehicle sales estimated to surge 70% year-on-year, driven by continued strong demand for its electric vehicle portfolio.

Hyundai Motor India, however, is likely to report a 19% decline in overall sales volumes due to temporary production disruptions following a fire at a supplier's facility. Nomura expects production to normalize by the end of June.

In the two-wheeler segment, Bajaj Auto's total sales are projected to increase 26%, while Hero MotoCorp's volumes are expected to remain largely unchanged. Eicher Motors, through its Royal Enfield business, is likely to report 34% year-on-year growth in June sales.

Within commercial vehicles, Ashok Leyland's medium and heavy commercial vehicle volumes are estimated to grow 4%, while Tata Motors' commercial vehicle business is expected to post 19% growth.

Despite the healthy demand outlook, Nomura cautioned that automobile manufacturers may face margin pressure during the first quarter of FY27 due to the delayed impact of elevated commodity costs. However, easing raw material prices are expected to support profitability in the coming quarters.

The brokerage maintained a positive view on Mahindra & Mahindra, Hyundai Motor India, Ather Energy, and Sona BLW Precision Forgings as its preferred picks within the automobile sector.