As on Sunday, the overall sales figures crossed 27.96 million units based on Vahan portal numbers, and, looking at the current daily average of over 77,000 units a day, the year may end with an all-time high sale of over 28.2 million units. This marks a sharp recovery for the industry, which crossed its pre-pandemic peak of 25.4 million units in 2018 only in calendar year 2024 and is improving further in 2025.
Though the initial months were not very lucrative for the industry, the festive season in October and November delivered a stellar performance, triggered by GST reforms that set off the turnaround. October 2025 witnessed an all-time high monthly sales of four million units, followed by 3.3 million units in November. In December, sales stood at 1.79 million units till Sunday, and in the next few days anywhere between 200,000 and 300,000 units may be added.
How did policy changes revive auto demand?
“Till September 22 GST reforms, it was a dull year for the industry with low single-digit growth. However, the turnaround started after the GST decisions. Adding to this, the rate cuts ensured that money is available at a low interest rate, while the income tax reforms came as a major middle-class relief, with the exemption limit rising to Rs 12 lakh. All these led to the availability of surplus resources with customers, resulting in the best year for the automobile industry,” said Sai Giridhar, vice president of the Federation of Automobile Dealers Associations (Fada).
Based on Fada numbers, cumulative industry sales for two-wheelers, three-wheelers, passenger vehicles and commercial vehicles till August stood at 10.5 million units, up only 2.9 per cent year-on-year. Months such as February and March posted negative sales.
What role did pricing and rural demand play?
Reports indicate that the GST 2.0 reforms resulted in an average price cut of 5–13 per cent across the industry. “In the last three decades of my career, I have not seen such drastic price cuts. Original equipment manufacturers are also continuing with discounts announced in August despite the rise in demand, which further supported customer interest. Moreover, in segments such as passenger vehicles, entry-level models are performing better after the GST decision, breaking the SUV wave of the last few years. Rural demand has also started picking up,” Giridhar added.
The industry has also highlighted the role of good monsoons and firm crop prices in the revival. “The recently concluded festive season has reinforced the strong consumption base of the country, supported by favourable rural sentiments following good monsoons and firm crop prices, positive effects of the GST overhaul and interest rate cuts. Demand sentiments are expected to remain stable in the coming year as well, with expectations of steady economic activity. However, factors such as supply chain-related headwinds, softened global auto demand and higher US tariffs on exports from India remain key monitorables,” said Srikumar Krishnamurthy, senior vice president and co-group head, corporate ratings, Icra.
