India’s auto retail sector grows 5.2% year-on-year in September, buoyed by GST 2.0 reforms and festive buying, with two-wheelers and passenger vehicles leading the recovery.
07 Oct 2025 | 2115 Views | By Darshan Nakhwa
India’s automobile retail industry ended September 2025 on a positive note, clocking 5.22% year-on-year growth, driven by the rollout of GST 2.0 reforms and the onset of the festive season. The Federation of Automobile Dealers Associations (FADA) said demand picked up sharply in the final week of the month, reversing ...
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India’s automobile retail industry ended September 2025 on a positive note, clocking 5.22% year-on-year growth, driven by the rollout of GST 2.0 reforms and the onset of the festive season. The Federation of Automobile Dealers Associations (FADA) said demand picked up sharply in the final week of the month, reversing the muted start that saw customers postpone purchases in anticipation of tax cuts.
According to FADA, two-wheeler and passenger vehicle (PV) sales led the recovery, rising 6.5% and 5.8% year-on-year, respectively. Tractor sales grew 3.6%, while commercial vehicles (CVs) posted a modest 2.6% rise, reflecting steady infrastructure activity. Three-wheelers and construction equipment, however, declined 7.2% and 19%, respectively, as urban demand and construction projects faced temporary disruptions due to heavy rains.
“September was an exceptionally unique month for India’s auto retail sector,” said FADA Vice President Sai Giridhar. “The first three weeks were largely muted, with customers holding back in anticipation of the GST 2.0 reforms. However, the dynamics changed dramatically in the final week as Navratri festivities coincided with the implementation of lower GST rates, reviving customer sentiment and accelerating deliveries across most vehicle categories.”
The association noted that limited billing days in September restricted the full potential of the rebound. However, dealers used this period to replenish inventory, particularly of passenger vehicles, which rose to about 60 days, indicating active restocking and preparedness for October’s peak demand. “The momentum built in late September is expected to carry forward into Deepawali, marking a promising end to the 42-days festive period.,” Giridhar added.
Navratri 2025
FADA described Navratri 2025 as a “historic high” for the auto retail sector, with overall vehicle sales soaring 34% year-on-year–the best festive growth on record. Two-wheelers registered the sharpest increase at 36%, aided by GST rate cuts, festive discounts, and pent-up demand. Passenger vehicles followed closely with a 34.8% surge, as affordability improved and customers upgraded to higher trims.
Commercial vehicles rose 14.8% on renewed financing activity and infrastructure optimism, while three-wheelers expanded 24.5%, reflecting stronger urban mobility demand. Tractor sales grew 18.7%. Only construction equipment lagged, declining 18% due to heavy rains that slowed project execution.
“Navratri 2025 will go down as one of the most memorable chapters in India’s automobile retail journey–a true ‘Bachat Utsav’ unleashed by the visionary GST 2.0 reform,” Giridhar said. “Dealerships saw record-breaking footfalls and deliveries across the country, underscoring how policy reform and festive sentiment together can transform market momentum.”
“This Navratri was not just a festival for consumers–it was a celebration for every dealer, every salesperson, and every worker in India’s mobility ecosystem. It reminded us what the right policy at the right time can do for a nation’s sentiment,” Giridhar said.
Near-Term Outlook
FADA remains highly optimistic for October 2025, expecting Dhanteras and Deepawali to deliver all-time high sales. The association cited a combination of factors such as above-normal monsoon, strong kharif harvest, stable RBI rates, and the affordability boost from GST 2.0, as key tailwinds for demand.
“Affordability, aggressive OEM schemes, and easy financing are drawing a new wave of buyers into showrooms,” the statement noted, adding that supply chain efficiency will be crucial to sustain momentum through the 42-day festive window.
April-September 2025
For the first half of FY2026 (April-September 2025), total vehicle retail volumes rose 3.42% year-on-year to 1.23 crore units, compared to 1.19 crore in the same period last year. Two-wheelers accounted for the bulk of sales, growing 3.1% to 88.37 lakh units, while passenger vehicles increased 3.7% to 19.5 lakh units. Tractor sales saw the highest growth at 10.7%, reflecting rural strength, while commercial vehicles rose 2.6%. Three-wheelers improved 3.9%, and construction equipment was the only segment to contract, slipping 5.4%.
With sentiment, liquidity, and market confidence all trending positive, FADA expects India’s auto retail industry to enter a “golden festive phase powered by GST 2.0.”