GST reductions and festive demand continue to drive Indian vehicle market up

Wholesale sales of light vehicles (LVs) in India increased 23% month-on-month (MoM) in October to 537,000 units. Passenger vehicles (PV) increased by 23% to 459,000 units, while light commercial vehicles (LCV) with a gross weight of up to 6 tonnes also increased by 23% to 78,000 units. On a year-over-year (YoY) basis, total BT volumes increased by 17%, with PV and LCV increasing by 17% and 16%, respectively.

The sharp monthly rise in wholesale sales of PV products was fueled by demand during the festive season and the introduction of new GST rates that reduced vehicle prices. Retail inflation fell to an eight-year low, boosting consumer confidence.

Retail sales of light vehicles in October showed exceptionally strong growth, increasing 83% month-on-month to 630,000 units from 344,000 units in September, according to the Federation of Automobile Dealers Associations (FADA). Retail photovoltaic sales soared 86% month-on-month, while commercial vehicle sales jumped 64% month-on-month. FADA linked this exceptional performance to Dussehra and Diwali which took place in the same month, as well as the impact of GST 2.0 reforms, which improved affordability and strengthened the purchasing power of the middle class. Compact and sub-4 meter cars have seen a marked resurgence as reduced tax rates have broadened the buyer base. Overall, LV’s retail sales increased 13% year-on-year in October, highlighting a strong festive sentiment and more attractive pricing across all segments.

At the end of October, PV inventory levels in India fell to 53-55 days, compared to around 60 days in September. This adjustment was largely driven by strong festive retail momentum and GST-led affordability gains, which together increased customer demands and boosted conversion rates at dealerships.

Over the first ten months of 2025, LCV sales increased by 3% year-on-year to 4.2 million units, including 3.6 million PVs (+3% year-on-year) and 600,000 LCVs (+3% year-on-year).

Demand is expected to remain strong in November and beyond, supported by GST cuts on automobiles and household goods, which should reduce costs and improve disposable income. The ongoing festive season, coupled with price reductions resulting from lower GST rates and aggressive promotional activity, is also likely to further boost purchases.

Our outlook for the Indian BT market has been revised upwards to reflect a stronger near-term trajectory. The market is expected to maintain strong growth momentum through 2025 (+5%) and 2026 (+6%), supported by healthy domestic demand, improving supply stability and a strong pipeline of new product launches. Photovoltaic sales are expected to increase 5% year-on-year in 2025, while light vehicle volumes are expected to increase 6% year-on-year. The long-term outlook through 2032 also remains positive, with light vehicle sales expected to reach 6.8 million units.

“GST cuts and festive demand continue to drive Indian automobile market” was originally created and published by Just Auto, a brand owned by GlobalData.

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