Are auto stocks overheating? November wholesales data show first signs of cooling

Auto stocks have rallied sharply this year, powered by GST cut announcements and a buoyant festive season. Several automakers also trimmed prices across popular models following the GST cut, improving affordability and drawing buyers back into showrooms. The November wholesale prints reinforce the optimism around the sector, yet they also show a sequential pullback, raising the question: has the festive frenzy already been fully priced into stocks, and how durable is demand now that the seasonal boost is over.
Narendra Solanki, head of fundamental research at Anand Rathi, said the month-on-month (MoM) wholesales decline for auto OEMs is largely optical, driven by the unusually early arrival of Dussehra and Diwali this year.
Fisdom’s head of research, Nirav Karkera, echoed this view, noting that what looks like a slump is simply the natural cooldown from an elevated base. “The post-festive dip came on expected lines,” he said.
An auto analyst, who did not wish to be named, added that GST benefits are likely “peaking out.” While the tax cut has undoubtedly improved affordability, they cautioned that it doesn’t guarantee a structural revival. With consumers aware the GST cut is permanent, “the real test starts December–January” as automakers attempt to maintain sales momentum without the festival tailwind.
Nov wholesales strong YoY, but MoM tells a different story
Across segments, November wholesale numbers remained healthy on an annual basis. Passenger vehicle (PV) wholesales for four listed players rose 22 percent YoY, led by Maruti Suzuki and Tata Motors Passenger Vehicles (both up 26 percent), and M&M (up 22 percent).
In two-wheelers, TVS Motor and Hero MotoCorp beat expectations with 30–32 percent YoY growth. Tractor sales were also robust—M&M posted 32 percent growth, while Escorts Kubota saw an 18 percent YoY rise.
But on a sequential basis, the festive comedown was visible. M&M reported the steepest fall with a 29 percent MoM drop, followed by Bajaj Auto, Tata Motors CV, Hero MotoCorp, TVS Motor and Hyundai. Only Maruti Suzuki and Ashok Leyland managed positive MoM additions.
Auto stocks fully valued; demand trends, commodity costs next triggers
Experts said the sustainability of demand and the direction of commodity costs will be the two key variables shaping sector momentum from here.
Motilal Oswal analysts highlighted that retail trends from Jan ’26 onward will be crucial. With festive discounts expected to taper as demand normalises, the coming months will reveal whether consumers continue to hold up the purchase cycle.
Commodity costs have risen meaningfully, up 80 basis point for both PVs and 2Ws since Sep ’25, led by higher precious metal prices. Karkera expects some margin pressure but believes operating leverage and efficiency gains could offset the hit.
The Nifty Auto index hit record highs twice last month, with stocks like M&M, Maruti Suzuki, Eicher Motors and Hyundai Motor India climbing up to 55 percent year-to-date. Many names are now trading near or above their 5-year historical valuation averages, suggesting that the near-term upside may be capped unless demand surprises positively.
Despite the concerns, Solanki of Anand Rathi remains constructive. He pointed to supportive drivers such as the ongoing wedding season, resilient rural demand, better interest-rate conditions, and higher disposable incomes, all of which continue to work in favour of the auto sector.
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