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Auto Sector Soars in CY25: GST Relief and Rural Demand Fuel Record Sales

The Indian auto sector concluded CY25 with robust performance, driven by GST benefits, improving macroeconomic conditions, and positive rural sentiment. Passenger vehicle sales surged 27% year-on-year in December 2025, fueled by GST cuts and year-end discounts. Commercial vehicles entered an early upcycle with 26% YoY growth, supported by infrastructure demand and higher fleet utilization. Strong growth also continued in two-wheelers, three-wheelers, and tractors, highlighting broad-based recovery across all segments.

Key Points: Indian Auto Sector CY25 Growth: GST Relief Boosts Sales

  • Passenger vehicles up 27% YoY
  • Commercial vehicles in early upcycle
  • Two & three-wheelers show robust growth
  • Tractor demand stays strong
2 min read

Auto sector ends CY25 on strong note as GST relief, rural demand lift sales across segments

Indian auto sector ends CY25 strong with GST relief and rural demand driving growth across PVs, CVs, two-wheelers, and tractors.

"The auto sector closed the last quarter of CY25 on a strong note, supported by GST tailwinds, improving macro conditions, and positive rural sentiment. – Asit C. Mehta Investment Intermediates Ltd"

New Delhi, Jan 3

The Indian auto sector closed the last quarter of calendar year 2025 on a strong footing, supported by GST tailwinds, improving macroeconomic conditions and positive rural sentiment.

Despite some month-on-month moderation after the festive season, year-on-year growth remained robust across most segments, highlighting sustained demand momentum.

According to the latest December 2025 Auto Sales Report by Asit C. Mehta Investment Interrmediates Ltd (ACMIIL), retail traction stayed healthy even after the festive period, especially in passenger vehicles, commercial vehicles, tractors and three-wheelers.

"The auto sector closed the last quarter of CY25 on a strong note, supported by GST tailwinds, improving macro conditions, and positive rural sentiment," the report said.

Passenger vehicles emerged as a key growth driver, aided by GST rate cuts, year-end discounts and pre-buying ahead of January price hikes.

Domestic volumes remained strong, even as exports were weaker for some manufacturers.

Data from Axis Securities showed that domestic passenger vehicle sales rose around 27 per cent year-on-year (YoY) in December 2025 and grew about 6 per cent year-on-year (YoY) on a cumulative basis.

Commercial vehicles also showed clear signs of an early upcycle. Improved fleet utilisation, rising freight activity and infrastructure-led demand supported growth, marking the second consecutive month of strong performance.

Domestic CV volumes grew 26 per cent year-on-year in December, the report said.

Axis Securities expects the CV industry to deliver high single-digit growth in FY26, led by demand in the bus segment.

The two-wheeler segment recorded strong year-on-year growth, although performance varied across manufacturers.

Three-wheelers continued their healthy growth trajectory, supported by steady domestic recovery and strong export demand.

The segment posted around 80 per cent year-on-year growth in December, data compiled by Axis Securities showed.

Tractor demand remained strong, backed by higher rabi sowing, favourable minimum support prices, healthy rural liquidity and positive farm sentiment, the report added.

- IANS

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Reader Comments

S
Sarah B
Great to see rural demand picking up. A strong farm sector is the backbone of our economy. If tractor sales are up, it means money is flowing in the villages. Very encouraging.
A
Aditya G
The 80% growth in three-wheelers is massive! It shows the gig economy and last-mile connectivity are booming. E-rickshaws must be a big part of this. Good for employment.
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Priyanka N
While the numbers look good, I hope this growth is sustainable and not just due to year-end discounts and pre-buying. Also, the article mentions weak exports - that's a concern we need to address for long-term health.
M
Michael C
Commercial vehicles up 26% YoY is a very strong leading indicator. It means businesses are investing in logistics and capacity. This bodes well for overall industrial growth in 2026.
K
Kavya N
As someone from a semi-urban area, I can confirm the sentiment is better. Better roads, easier loans, and good harvests have made people consider buying vehicles. Hope this continues!

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