Two-Wheelers Race Ahead as Passenger Vehicle Profits Stall

India’s auto sector is moving in two different directions. Two-wheeler makers are accelerating profit growth, while passenger vehicle giants are struggling to keep earnings on track. Q2 FY27 brought a striking contrast: strong revenue growth across the industry, but very different outcomes on the bottom line.

TVS Motor, Bajaj Auto and Hero MotoCorp benefited from premium models, export demand and electric vehicle growth to deliver strong profit increases. Meanwhile, Maruti Suzuki and Hyundai Motor India reported lower profits despite higher revenues, as rising costs and margin pressure took their toll.

The message from the quarter is clear: selling more vehicles is only half the race. The real test is how much profit automakers can retain after accounting for rising costs, pricing pressure and investments in growth.

Two-Wheeler Makers Benefit from Premiumisation and Exports

Two-wheeler manufacturers delivered a strong performance during the quarter, supported by demand for premium models, growth in exports and the expansion of electric vehicle offerings.

TVS Motor Company reported a 52.4% year-on-year increase in standalone net profit to Rs.1,377.15 crore. Revenue grew 43.7%, while operating EBITDA margin expanded by 30 basis points to 13%.

The company’s performance reflects its ability to combine volume growth with a stronger product mix. Its electric scooter business also continued to expand, supporting its push into a segment that could become an increasingly important contributor to future earnings.

TVS Motor Company Director and CEO K. N. Radhakrishnan highlighted the company’s record performance, saying, “We are delighted to share that during this quarter, we achieved the highest-ever sales volume, revenue and profits.”

He also pointed to improving electric vehicle economics, noting that EV profitability was improving quarter after quarter, driven by increasing scale, new variants and a focus on both revenue and profitability.

The emphasis on EV profitability is significant. While higher volumes can help manufacturers spread costs across more vehicles, sustainable returns will depend on pricing, production efficiency and the ability to compete in an increasingly crowded electric two-wheeler market.

Bajaj Auto also recorded strong growth with standalone profit after tax rising 35.2% to Rs.3,353.76 crore. Revenue increased 34.1%, crossing Rs.20,000 crore during the quarter.

Exports remained an important contributor, with export volumes increasing 41%, according to the figures provided. A broad international presence can help manufacturers offset fluctuations in individual markets, although it also exposes them to currency movements and changing overseas demand.

Hero MotoCorp reported a 41% increase in consolidated profit after tax to Rs.1,861 crore. Growth in premium scooters and the expansion of its VIDA electric vehicle portfolio supported its broader product strategy.

CEO Harshavardhan Chitale pointed to strong demand across scooters and premium motorcycles, saying “We delivered a strong performance this quarter with scooters and premium motorcycles showing excellent traction.”

He attributed the performance to the company’s product portfolio and its ability to respond to changing customer preferences, adding that the focus would remain on sustaining momentum.

For Hero MotoCorp, the challenge will be to maintain this traction while building its premium and electric vehicle businesses. Premiumisation can improve average selling prices, but lasting gains will depend on consumer demand, competition and the profitability of newer models.

Passenger Vehicle Makers Face Margin Pressure

The picture was different for passenger vehicle manufacturers. Maruti Suzuki India and Hyundai Motor India reported revenue growth but lower profits, illustrating how higher sales can be offset by rising costs and other factors affecting earnings.

Maruti Suzuki India recorded a 26% increase in consolidated revenue to Rs.53,355.5 crore. However, consolidated net profit declined 26.4% to Rs.2,466.1 crore.

The divergence between revenue and profit highlights the pressure on the company’s bottom line. Higher input costs can reduce the amount a manufacturer earns from each vehicle unless price increases, cost savings or a more profitable product mix compensate for the increase.

The decline also reflected mark-to-market adjustments on the company’s investment surplus, meaning the profit fall should not be attributed entirely to operating costs. Separating operating performance from investment-related movements is essential to understanding the underlying business.

Hyundai Motor India reported its highest-ever quarterly revenue of Rs.20,696 crore, up 18.5% year-on-year. Consolidated profit after tax, however, fell 23.9% to Rs.1,196.2 crore.

The company faced pressure on operating margins with the figures provided indicating a 440-basis-point contraction. Higher commodity costs can weigh on margins when manufacturers cannot fully pass them on to customers through price increases.

Hyundai Motor India Managing Director and CEO Tarun Garg described Q2 as a milestone quarter with record volumes and quarterly revenue exceeding Rs.20,000 crore for the first time since the company’s inception. However, he acknowledged that elevated commodity costs had weighed on profitability.

Looking ahead, Garg expects momentum to accelerate in the second half of FY27, with the launch of the Bayon marking the beginning of what he called the company’s “golden product cycle.”

The key question is whether new launches and stronger volumes can help Hyundai recover margins. New models can support sales and improve the product mix, but their contribution to profitability will depend on pricing, demand and production costs.

Q2 FY27: Revenue Growth Versus Profit Growth

The contrast between the two segments is visible in the reported results.

The comparison shows that the three two-wheeler manufacturers converted revenue growth into stronger profit growth, while the two passenger vehicle makers experienced falling profits despite higher revenues. 

However, the results do not establish that every two-wheeler manufacturer is outperforming every passenger vehicle maker. Company-specific factors including product mix, export exposure, input costs and non-operating income also influence earnings.

What to Watch Next

The next test for two-wheeler manufacturers will be whether strong demand, export momentum and premiumisation can continue to support earnings. Growth in electric vehicles will also need to translate into sustainable returns as competition intensifies and manufacturers invest in new products. 

Passenger vehicle makers will focus on recovering margins through cost controls, operating efficiencies, pricing decisions and changes in their product mix. For Hyundai, new launches could provide an additional growth driver, while the broader segment will need to balance price increases against consumer demand. 

Overall, Q2 FY27 highlights a widening gap between revenue growth and profitability across parts of India’s automotive industry. Strong sales remain important, but the ability to retain more of each rupee of revenue is what ultimately determines whether that growth creates value for shareholders.