Retail sales of vehicles across segments in India grew 7.71 percent in calendar year 2025, supported by GST 2.0 rate cuts whose impact carried through the remaining part of the year after a slow start, industry body Federation of Automobile Dealers Associations (FADA) said on January 6.
Total retail volumes stood at 2,81,61,228 units in 2025, compared with 2,61,45,445 units in 2024.
Passenger Vehicles Lead Growth
Passenger vehicle (PV) retail sales recorded strong momentum, rising 9.7 percent year-on-year to 44,75,309 units in 2025 from 40,79,532 units a year ago, FADA data showed.
Two-wheeler sales also remained resilient, increasing 7.24 percent to 2,02,95,650 units, while three-wheeler retail volumes grew 7.21 percent to 13,09,953 units.
Commercial vehicle (CV) sales posted a comparatively moderate growth of 6.71 percent, with retail volumes reaching 10,09,654 units during the year.
A Year Of Two Distinct Halves
Commenting on the trend, FADA President CS Vigneshwar described 2025 as a “year of two halves”.
He said the period between January and August remained subdued despite supportive macro factors such as direct tax relief announced in the Union Budget and cumulative repo rate cuts by the Reserve Bank of India.
“During this phase, customers remained value-conscious, while finance approvals were selective in certain pockets, leading to uneven demand conversion,” Vigneshwar said.
GST 2.0 Triggers Turnaround From September
The demand outlook changed sharply from September onwards following the rollout of GST 2.0 rate rationalisation.
According to FADA, tax reductions for mass-market segments—including small cars, two-wheelers up to 350cc, three-wheelers and key commercial vehicle categories—improved affordability and lifted consumer sentiment.
This resulted in a sustained recovery through the September–December period.
EV And CNG Adoption Gathers Pace
The industry body also highlighted a steady shift in the fuel mix. Electric vehicle penetration increased across two-wheelers, passenger vehicles and commercial vehicles, while EVs continued to dominate the three-wheeler segment.
At the same time, CNG strengthened its presence in passenger and commercial vehicles, pointing to a more diversified mobility ecosystem.
Outlook For Early 2026 Remains Positive
Looking ahead, FADA said dealer sentiment remains upbeat for the next three months, with nearly 75 percent of respondents expecting growth.
Demand is expected to be supported by post-GST 2.0 momentum, a busy festive and wedding season, and typical year-end buying trends.
Rural sentiment is also improving, aided by higher rabi sowing and a favourable winter crop outlook, which could boost farm incomes.
