Tata Motors, Ashok Leyland Report Strong Growth
Commercial vehicle sales rose over 30% year-on-year in Q2 FY27 despite weak monsoon conditions and higher input costs.
India’s commercial vehicle sector recorded strong sales growth in the second quarter of FY27, with Tata Motors and Ashok Leyland reporting year-on-year increases of 42.7% and 31.7%, respectively. The growth came despite a broadly deficient monsoon in several regions and continuing geopolitical tensions in the Middle East.
Tata Motors reported sales of 135,114 commercial vehicles during the September 2026 quarter, including 113,982 units in the domestic market. Overseas sales rose 177.3% year-on-year to 21,132 units, while domestic sales increased 30.9%. The company attributed demand for heavy commercial vehicles to infrastructure, construction and mining activity, while medium and light vehicles benefited from demand linked to e-commerce and fast-moving consumer goods.
Ashok Leyland recorded commercial vehicle sales of 64,677 units in Q2 FY27, marking growth of approximately 31.7% year-on-year. Demand for medium and heavy commercial vehicles supported the increase, reflecting continued activity in key transport and industrial segments.
The sector has benefited from policy support, including the reduction in the Goods and Services Tax on trucks, buses and commercial vehicles from 28% to 18%, effective September 22, 2025. Measures by the government and the Reserve Bank of India to support economic activity have also contributed to the operating environment. The tax change additionally created a favourable base for year-on-year comparisons.
However, the strong sales figures have not removed concerns about profitability. Higher steel and copper prices have increased input-cost pressure across the automotive industry. Tata Motors’ operating profit margin declined marginally year-on-year to 10.2% in the first quarter of FY27, while Ashok Leyland’s margin fell by 110 basis points to 10%. Both companies raised vehicle prices during the September quarter, with investors watching whether these increases will adequately offset higher costs.
Tata Motors is also pursuing a voluntary tender offer for Italy-based Iveco Group, with the offer scheduled to run until October 26, 2026. If completed successfully, the combination could create a commercial vehicle business with projected revenue of approximately €21 billion, according to the company’s stated expectations.
The strong quarterly sales have put Tata Motors and Ashok Leyland on investors’ watchlists. However, future performance will depend on sustained demand, input costs, margin protection, valuations and the broader economic environment. Sales growth alone does not guarantee future stock returns, and investors should assess their own risk tolerance before making investment decisions.