Auto sector hits fast lane in 2025 with 7.7% growth across all segments

Dealers are optimistic, with 70.48 per cent expecting January 2026 growth post-festivals and 74.91 per cent forecasting expansion in January-February-March period of 2026.

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India’s auto retail sector ended 2025 on a high note with strong growth driven by GST 2.0 reforms and rural demand, according to the Federation of Automobile Dealers Associations (FADA) data. As per the data released, total vehicle sales stood at 2,81,61,228 units in 2025, marking a 7.71 per cent year-over-year increase.

Total auto retail reached 28,161,228 units, up 7.71 per cent from 2024. Passenger vehicles led with 9.70 per cent growth to 44,75,309 units, while rural PV sales surged 12.31 per cent against urban’s 8.08 per cent , highlighting expanded personal mobility.

On the other hand, two-wheelers grew 7.24 per cent to 2,02,95,650 units, tractors rose 11.52 per cent to 9,96,633, and commercial vehicles increased 6.71 per cent to 10,09,654.

“The turning point came from September onwards, when the landmark GST 2.0 rate rationalisation—including meaningful reductions for mass segments like small cars, two-wheelers (up to 350cc), three-wheelers and key commercial categories—improved affordability and lifted sentiment, leading to a clear upshift through September–December, said FADA President C S Vigneshwar.

December 2025 Surge

As per FADA, sales hit 20,28,821 units during the last month of 2025, a robust 14.63 per cent YoY rise fueled by year-end offers and pre-buying ahead of price hikes. Passenger vehicles jumped 26.64 per cent to 3,79,671 units with rural growth at 32.40 per cent , three-wheelers soared 36.10 per cent to 1,27,772, and commercial vehicles climbed 24.60 per cent to 83,666. Two-wheelers posted 9.50 per cent growth to 13,16,891 units despite supply constraints.

Fuel transition trends

Electric vehicles continued to gain traction as 3W EV share hit 60.91 per cent in 2025 and 69.12 per cent in December. Meanwhile, the share of 2W EV stood at 6.31 per cent last year. CNG strengthened in PV to 21.30 per cent yearly share and CV to 11.81 per cent , signaling diversified preferences. PV EV share reached 3.95 per cent for the year, the report highlighted.

Going forward, dealers are optimistic, with 70.48 per cent expecting January 2026 growth post-festivals and 74.91 per cent forecasting expansion in January-February-March period of 2026 amid marriage season and rural traction.