Bharat Forge, SAMIL, Balkrishna Industries: What 2026 global auto outlook hints at

Nuvama Institutional Equities said it continued to prefer auto component makers with strong global exposure, highlighting Balkrishna Industries, Bharat Forge and SAMIL as its top ideas. The brokerage said these companies were well placed to outpace industry trends in 2026 on the back of diversified order books and sustained efforts to deepen presence across key international markets.

Nuvama said the global auto industry was likely to end 2025 on a weak note, although commentary from major OEMs indicated signs of improvement across most segments in 2026. For the year ahead, heavy commercial vehicles (HCVs) in the EU were expected to grow up to 2 per cent, while North America (NA) Class 8 truck volumes were likely to decline by up to 6 per cent. In small agri and construction equipment (CE), demand in NA and the EU was expected to remain in the flat to 5 per cent range, whereas large agri equipment volumes in NA were projected to contract by as much as 20 per cent.

According to S&P Global, passenger vehicle (PV) production in the EU was likely to stay flat in 2026, while North America volumes were estimated to fall by around 3 per cent. Nuvama said this implied a relatively better outlook for CVs and CEs in CY26 compared with CY25—an environment that remained progressively positive for globally exposed firms such as Balkrishna Industries, Bharat Forge and SAMIL.

Heavy commercial vehicles: In Q3CY25, retail sales of NA Class 8 trucks fell 20 per cent year-on-year, while EU HCV volumes grew 5 per cent. OEMs such as Volvo, Daimler and Paccar expected CY25 to close weak, with declines of up to 19 per cent in NA and 14 per cent in the EU. For CY26, EU volumes were expected to grow up to 2 per cent on a low base, while NA volumes could fall up to 6 per cent. Nuvama said replacement-led demand and higher defence spending were likely to support the EU market, whereas the NA long-haul freight recession and caution around EPA CY27 norms continued to weigh on sentiment.

Construction equipment: Heavy CE volumes in Q3CY25 grew 1 per cent in NA and 8 per cent in the EU. OEMs such as Volvo and CNH expected CY25 demand in NA to weaken by up to 10 per cent and EU demand to range between a 5 per cent contraction and 5 per cent growth. For CY26, Volvo guided for NA sales in the –10 per cent to flat range, and –5 per cent to +5 per cent in the EU, while John Deere expected NA to be flat to +5 per cent. Nuvama said construction backlogs, infrastructure spending, softening interest rates and rental fleet expansion were likely to support demand.

Tractors: In Q3CY25, small tractor (0–140HP) volumes were flat year-on-year, while large tractor (140HP+) volumes in NA declined 41 per cent. EMEA markets fell 2 per cent. CNH expected CY25 small and large tractor volumes in NA to fall up to 10 per cent and 35 per cent respectively, and up to 15 per cent in the EU. For CY26, John Deere projected a further decline of up to 20 per cent in NA large agri, while small agri in NA and the EU was expected in the flat to +5 per cent range. Strong beef prices in NA and improved dairy margins in the EU were likely to support farm-sector profitability.

Passenger vehicles: In Q3CY25, PV sales rose 6 per cent in the EU, 15 per cent in China and 6 per cent in the US. S&P Global expected CY25 production to decline 1 per cent each in the EU and NA, while China was likely to grow 7 per cent. For CY26, EU volumes were expected to remain flat, with NA declining around 3 per cent.