India’s automobile industry is entering 2026 on a strong note after a record-breaking festive season, with the Federation of Automobile Dealers Associations (FADA) projecting a sustained rise in sales driven by GST 2.0 reforms, rural consumption, and robust dealer sentiment.
FADA’s latest data shows October 2025 auto retail sales surged 40.5 per cent year-on-year, reaching an all-time high. The 42-day festive period covering Dussehra to Diwali posted record numbers with a 21 per cent year-on-year increase, cementing it as the strongest festive cycle in India’s automotive history
The growth was broad-based, two-wheelers jumped 52 per cent to 31.5 lakh units, while passenger vehicle (PV) sales rose 11 per cent to touch 5.57 lakh units. Commercial vehicles grew 18 per cent, and tractors climbed 14 per cent, underscoring a widespread recovery across categories.
FADA President C.S. Vigneshwar said October 2025 marked “The 42-day festive period of 2025 stands as a defining milestone for India’s auto retail, delivering the highest-ever sales and growth across categories. Overall vehicle retails surged 21% YoY, affirming the success of the Government’s transformative GST 2.0 reforms — a reform that truly embodies the spirit of Simpler Tax, Stronger Growth.” PV sales in rural markets grew three times faster than urban areas, while two-wheeler growth was nearly double that of cities.
The association expects the festive surge to spill over into the remaining months of 2025, powered by harvest incomes, wedding-season purchases, and continued policy support. FADA’s dealer survey indicates that 64 per cent of retailers expect growth in November, with another 70 per cent projecting expansion between November and January 2026
“Overall, Dealer confidence remains upbeat yet measured — with 64% expecting growth, 27% anticipating a flat trend, and only 8% foreseeing a decline,” FADA noted, adding that post-festive moderation is expected but volumes will stay firm. Passenger vehicle dealers are banking on pending festive deliveries and steady demand for compact cars boosted by GST rate cuts. Two-wheeler retailers foresee continued rural traction, aided by improved liquidity and tax benefits.
Commercial vehicle sales are also likely to stay robust due to freight and infrastructure demand, while tractor volumes are expected to benefit from farm cash flows and rural infrastructure spending.
In the medium to long term, FADA sees India’s auto retail sector maintaining a structurally positive trajectory, supported by the GST 2.0 “Simpler Tax, Stronger Growth” framework, affordable financing, and steady fuel prices.
The association described the current environment as a confluence of reform, resilience, and rural revival, noting that GST 2.0 has made ownership more attainable and strengthened middle-class consumption, particularly in small-car and two-wheeler segments
“As we step into 2026, the momentum from GST 2.0 and the Viksit Bharat vision continues to anchor growth. India’s auto retail is poised for a stable, inclusive expansion,” FADA said.
The sector, it added, now enters the new year on firm and confident footing, transforming festive euphoria into sustainable growth across the nation. (ANI)
