New Delhi, Jan 6 (.) India’s automobile retail market ended calendar year 2025 on a firm and confident footing, supported by improving consumer sentiment, policy support and a strong year-end performance, said the Federation of Automobile Dealers Association (FADA) released here on Tuesday.
Total vehicle retail sales for CY’25 stood at 2.81 crore units, marking a healthy year-on-year expansion and underlining the sector’s resilience despite an uneven start to the year.
The year clearly played out in two distinct phases. The first eight months remained muted, with buyers staying value-conscious and financing approvals selective in several pockets.
This led to uneven conversions across regions and segments despite broadly supportive macro conditions. The tide turned decisively from September onwards after the implementation of GST 2.0 rate rationalisation.
Lower tax incidence on mass segments such as small cars, two-wheelers, three-wheelers and key commercial vehicle categories improved affordability and revived consumer confidence, resulting in a sharp upshift in retail activity through the final quarter.
Across segments, growth was broad-based. Two-wheelers continued to anchor volumes, while passenger vehicles posted robust expansion, reflecting sustained demand for personal mobility.
Commercial vehicles also registered steady growth, supported by improved goods movement and underlying economic activity, while tractors recorded a strong performance on the back of supportive rural fundamentals. Construction equipment, however, remained under pressure, reflecting selective capex activity.
A notable trend during CY’25 was the strengthening of rural demand. Overall rural retail growth closely tracked urban markets, but the standout performance came from rural passenger vehicles, which outpaced urban growth.
This underlined the widening reach of personal mobility beyond major cities and metros, supported by improving agricultural cash flows and infrastructure-led development.
The year also reinforced India’s ongoing mobility transition. Electric vehicles deepened their presence, particularly in three-wheelers, where EVs continued to dominate. EV penetration improved in two-wheelers and passenger vehicles as well, while CNG gained further traction in passenger and commercial vehicles.
Together, these trends signal a steadily diversifying fuel mix and rising consumer acceptance of alternative powertrains.
December 2025 capped the year with a strong finish. Auto retail volumes in the month rose sharply on a year-on-year basis, aided by positive post–GST 2.0 sentiment, year-end promotional schemes and pre-buying ahead of expected price revisions in January. Passenger vehicles and commercial vehicles led the growth, with rural markets again outperforming urban centres.
Dealers also focused on liquidating year-end inventories, resulting in healthier stock positions by the close of the month.
Looking ahead, dealer sentiment remains firmly optimistic. For January 2026, a majority of dealers expect growth, with demand likely to strengthen in the second half of the month after the festive lull, supported by the marriage season.
Over the next three months, confidence remains high, driven by festival demand, financial-year-end buying, continued rural traction and supportive post–GST 2.0 sentiment. Key watchpoints include timely availability of in-demand models, disciplined inventory management and faster turnaround times for vehicle financing.
Overall, the auto retail sector enters 2026 with improved visibility, healthier enquiry pipelines and a more confident consumer, setting the stage for sustained momentum in the months ahead.
. SAS RB 1616