India’s automobile retail market closed calendar year 2025 with total sales of 2.82 crore units, registering a 7.71% year-on-year growth, industry body Federation of Automobile Dealers Associations (FADA) said on Monday.
According to FADA, the year unfolded in two distinct phases, with muted demand between January and August giving way to a sharp recovery in the September–December period. FADA president C S Vigneshwar attributed the turnaround to the GST 2.0 rate rationalisation implemented in September, which improved affordability across mass-market segments such as small cars, two-wheelers up to 350 cc, three-wheelers and commercial vehicles December emerged as a standout month, with retail volumes rising 14.63% year-on-year to 20.29 lakh units. Demand was supported by sustained post-GST sentiment, year-end discounting and pre-buying ahead of expected price hikes in January.
Rise in rural passenger vehicles
Rural markets outpaced urban centres, particularly in passenger vehicles (PVs). Rural PV sales rose 12.31% during CY25 compared with 8.08% growth in urban areas, highlighting expanding personal mobility beyond metros. The divergence widened further in December, with rural PV growth at 32.40%, versus 22.93% in urban markets. For the full year, urban retail grew 8.20%, while rural markets expanded 7.31%.
Across segments, two-wheelers remained the largest category, growing 7.24% to 2.03 crore units. Passenger vehicles recorded 9.70% growth at 44.75 lakh units, while commercial vehicles rose 6.71% to 10.10 lakh units. Tractors led growth at 11.52%, reaching 9.97 lakh units, aided by rural demand, while three-wheelers expanded 7.21% to 13.10 lakh units. In contrast, construction equipment declined 6.67% during the year.
Alternative fuels strengthened in 2025
The shift toward alternative fuels strengthened in 2025. Electric vehicles accounted for 60.91% of the three-wheeler market, with penetration of 6.31% in two-wheelers and 3.95% in passenger vehicles. CNG vehicles continued to gain traction, capturing 21.30% share in passenger vehicles and 11.81% in commercial vehicles.
Dealer sentiment remained constructive. FADA’s survey showed 59.78% of dealers reporting healthy liquidity and 64.94% expressing positive sentiment. Looking ahead, 77.86% of dealers expect growth in CY26, supported by festival and marriage-season demand, year-end buying trends and sustained rural momentum following strong rabi sowing. That said, dealers flagged financing turnaround times and timely availability of high-demand models as operational challenges that could constrain near-term momentum.
Passenger vehicle inventory levels moderated to 37–39 days in December, about seven days lower than the previous month, as dealers cleared 2025 model-year stock through aggressive schemes. The data was compiled from 1,401 of 1,459 regional transport offices across India in collaboration with the Ministry of Road Transport and Highways; figures from Telangana were not included.