SYNOPSIS: India’s auto retail sales rose 7.71 percent to 2.81 crore units in CY25, led by the GST 2.0 boost, strong December growth, rising EV/CNG adoption, and optimistic dealer outlook for 2026 ahead.
Federation of Automobile Dealers Associations (FADA), the apex national body representing India’s auto retail industry, covers sales, service and spares across two-wheelers, three-wheelers, passenger vehicles, commercial vehicles and tractors, representing over 15,000 automobile dealerships nationwide.
India’s auto retail market wrapped up 2025 on a strong note, with improving demand, supportive policy changes, and rising adoption of EVs and CNG vehicles. FADA’s latest data highlights key trends shaping the sector and sets the tone for 2026.
CY25 Auto Retail performance
India’s auto retail sector closed CY25 on a strong note, with total retail sales of 2.81 crore units, marking 7.71 percent YoY growth. The year unfolded in two phases – sales remained subdued between January and August despite supportive macro conditions, as consumers stayed value-conscious and financing approvals were selective.
Momentum improved from September onwards following GST 2.0 rate rationalisation, which enhanced affordability across mass segments such as small cars, 2W (up to 350cc), 3W and key commercial vehicles, driving a sharp pickup through year-end.
Category-wise growth stood at 7.2 percent for 2W, 9.7 percent for PV, 6.7 percent for CV, and 11.5 percent for tractors. Demand was broad-based, with urban retail growing 8.2 percent and rural sales rising 7.3 percent, while rural PV demand outpaced urban markets.
CY25 also reinforced the shift toward alternative mobility, with higher EV penetration across segments and rising CNG adoption in passenger and commercial vehicles. The year ends with stronger demand visibility and improved consumer confidence heading into 2026.
December 2025 Auto Retail performance
December 2025 marked a strong close to the calendar year for India’s auto retail sector. Total retail sales stood at 20.3 lakh units, registering a robust 14.6 percent year-on-year growth, supported by positive sentiment post GST 2.0, year-end offers, and pre-buying ahead of anticipated price hikes in January, helping dealers convert enquiries and spillover bookings in a time-bound manner.
2W recorded 9.5 percent YoY growth, with steady demand despite selective supply constraints and model-wise availability issues. EV penetration continued to improve, with electric 2W accounting for 7.4 percent of retail sales, up from 6.1 percent last year, driven largely by stronger urban demand and improved liquidity.
CV sales saw a sharp 24.6 percent YoY rise, led by strong economic activity, higher goods movement, and sustained demand in the load segment. Medium CV performed particularly well, while LCVs and HCVs also posted healthy growth. Passenger carrier demand remained supportive, though financing turnaround times and selective approvals continued to pose challenges in some markets.
PVs extended their strong momentum, growing 26.6 percent YoY, with rural demand (32.4 percent) significantly outpacing urban growth – highlighting the widening reach of personal mobility beyond metros. Dealers also focused on clearing MY25 inventory through attractive schemes and improved model mix availability.
PV inventory levels eased to 37-39 days, down by around 7 days month-on-month. The fuel mix further reflected the ongoing transition, with CNG accounting for ~21 percent of PV retail and EVs at around 4 percent, underscoring a steadily diversifying customer preference base.
January 2026 Outlook
Dealer sentiment remains strongly positive, with over 70 percent of respondents expecting growth. January 2026 is likely to unfold in two phases – a seasonally softer first half, followed by a stronger pickup in the latter half as the lean period ends. Demand typically improves after Makar Sankranti/Pongal, gathering further momentum with the onset of the marriage season, supported by healthy enquiry and booking pipelines.
Macro factors are expected to provide additional support. The RBI’s repo rate cut in December 2025 and continued emphasis on system liquidity are improving borrowing sentiment at the margins. Rural demand is also expected to remain supportive, aided by strong rabi sowing progress and the near completion of the kharif harvest, which usually boosts cash flows in hinterland markets over the next few weeks.
At the same time, OEM price hike announcements in January could trigger some pre-buying and faster purchase decisions, though affordability sensitivity remains a key monitor. Operationally, retail conversions will depend on the timely availability of high-demand models, attractive dealer schemes, and quicker finance approvals – particularly in mass-market two-wheelers, passenger vehicles, and light commercial vehicles, where longer turnaround times can increase customer drop-offs. Overall, sentiment for January remains constructive and optimistic.
December 2025 Market Share
The following section highlights the top four players by sales and market share across key segments, including 2W, 3W, CVs, Construction Equipment, PVs, and Tractors – based on December 2025 performance compared with December 2024.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
