India's automobile sector attracted fresh investments, acquisitions and capacity expansion in recent months, while retail demand and electric vehicle (EV) adoption continued to contribute to industry activity, according to a report by a market research firm.

The report stated that companies across the automotive value chain raised more than Rs. 35 billion (US$ 367 million) through equity funding, strategic investments and expansion plans, alongside mergers and acquisitions aimed at increasing manufacturing capacity and diversifying product portfolios.

Among the key transactions, Craftsman Automation raised approximately Rs. 20 billion through a Qualified Institutional Placement (QIP), with the proceeds primarily earmarked for debt reduction and capacity expansion. Ola Electric Mobility raised nearly Rs. 7.8 billion through a QIP to support manufacturing expansion and strengthen its balance sheet.

EV manufacturer Simple Energy secured approximately Rs. 2.5 billion in a Series B funding round to increase production, while JBM Ecolife Mobility raised about Rs. 7.5 billion to expand its operational electric bus fleet over the next 12 months.

In the components segment, Rane (Madras) agreed to acquire the friction business of Hindustan Composites for approximately Rs. 3.7 billion, while Sona BLW Precision Forgings approved capital expenditure of around Rs. 630 million to enter the robotics components manufacturing segment.

According to the report, these investments indicate continued capital deployment across vehicle manufacturers, EV companies and automotive component suppliers.

On the demand side, automobile retail sales rose by 9.5% year-on-year in May 2026. Retail volumes declined by 6.7% compared with April, which the report attributed to seasonal factors and the delayed south-west monsoon rather than weaker demand.

Passenger vehicle retail sales increased by 23.3% year-on-year. Rural markets recorded growth of 30.4%, compared with 18.8% in urban markets. Commercial vehicle sales also increased in rural areas, rising by 8.1% compared with 2.6% in urban markets. Two-wheeler retail sales increased by 7.5%.

The report also noted continued growth in electric mobility. EV penetration in the two-wheeler segment increased to 9.3%, up from 6.1% a year earlier. In the passenger vehicle segment, CNG vehicles accounted for 23.3% of retail sales, while EVs contributed 6.6%, taking the combined share of alternative powertrains to more than 38%.

According to the report, EV penetration in the commercial vehicle segment reached 2.8%, the highest level recorded to date.

The report also cited policy support for the sector, including the notification of the Delhi Electric Vehicles Policy 2026, which proposes investments of approximately Rs. 150 billion to support EV adoption through incentives and phased electrification targets.

The research firm stated that mergers and acquisitions, private equity investments and capital market activity remained active across OEMs, EV companies and automotive component manufacturers, with ancillary companies accounting for a significant share of deal activity. The report added that continued investments, expanding EV infrastructure and domestic demand are expected to contribute to the sector's medium- to long-term development.