India’s automobile retail industry closed 2025 with steady growth across most segments, aided by a strong recovery in the second half of the year, industry body Federation of Automobile Dealers Associations said on Monday.
According to FADA data, total vehicle retail sales stood at 28.16 million units in 2025, registering a year-on-year growth of 7.71 per cent. The association described the year as a “two-half year,” with demand remaining muted until August before gathering momentum from September onwards.
FADA said cautious consumer spending and selective financing approvals weighed on sales during the January–August period. However, demand improved sharply following policy measures such as GST 2.0 rate rationalisation, which reduced the tax burden on mass-market vehicles including small cars, two-wheelers, three-wheelers and select commercial vehicles.
This led to a sustained rise in retail activity during the September–December quarter.
Segment-wise, two-wheelers remained the largest category, growing 7.24 per cent to over 20.29 million units. Passenger vehicle sales rose 9.70 per cent to 4.47 million units. Commercial vehicles recorded a 6.71 per cent increase, tractors grew 11.52 per cent, while three-wheelers expanded 7.21 per cent. Construction equipment was the only segment to post a decline, falling 6.67 per cent year-on-year.
Rural markets outperformed urban centres in passenger vehicle sales during the year. Rural PV retail rose 12.31 per cent, compared to 8.08 per cent growth in urban areas, highlighting expanding personal mobility beyond major cities.
Overall, urban auto retail grew 8.20 per cent, while rural markets recorded a 7.31 per cent increase, indicating broadly balanced growth across regions.
Electric vehicles continued to gain traction in 2025, particularly in the three-wheeler segment, where EVs accounted for over 60 per cent of total retail sales. EV penetration in two-wheelers rose to 6.31 per cent, while passenger vehicle EV share reached nearly 4 per cent.
CNG vehicles also saw wider adoption, with a 21.3 per cent share in passenger vehicles and an 11.81 per cent share in commercial vehicles.
December 2025 delivered a strong year-end performance, with overall auto retail sales rising 14.63 per cent year-on-year to 2.03 million units. Passenger vehicle sales surged 26.64 per cent, commercial vehicles grew 24.60 per cent, and three-wheelers rose 36.10 per cent.
Rural passenger vehicle demand remained particularly strong in December, increasing 32.40 per cent, compared to 22.93 per cent growth in urban markets. Dealers also benefited from year-end promotional offers and advance purchases ahead of expected price hikes in January.
Inventory levels improved during the month, with passenger vehicle stock reducing to around 37–39 days, nearly a week lower than in November.
Looking ahead, dealer sentiment remains positive. FADA said over 70 per cent of dealers expect growth in January 2026, while nearly 75 per cent anticipate expansion over the next three months, supported by the marriage season, festival demand, improving rural cash flows and easier monetary conditions following the repo rate cut by the Reserve Bank of India in December.
-ANI
