Auto sector outlook 2026: Demand seen sustaining, premiumisation key theme; GST cuts, pay commission to drive growth

After a slow start in 2025, policy support and tax rationalisation helped revive auto demand, particularly in entry-level and commercial vehicles. As the industry heads into 2026, premiumisation, budget-led capex spending and potential pay commission benefits are expected to shape growth, even as automakers grapple with currency depreciation and rising input costs.