India, June 2 -- India's automobile industry entered FY27 on the back of a strong March quarter, with vehicle manufacturers reporting a combined 22 per cent year-on-year volume increase. However, a new report from Kotak Institutional Equities suggests that the sector may face profitability challenges in the coming months as raw material costs continue to rise.

The brokerage highlighted that automakers across key segments benefited from healthy demand during the March quarter of FY26. Passenger vehicles, two-wheelers, commercial vehicles and tractors all contributed to the growth momentum, helping original equipment manufacturers (OEMs) post robust sales volumes.

According to the report, demand conditions across most vehicle categories a...