Indian Auto Industry Shows Mixed Performance in August 2025 ahead of GST Cuts

The industry produced a total of 26.93 lakh units across all vehicle categories in August 2025, representing an 8.1% increase over the same period last year. However, domestic sales patterns revealed a more complex story across different segments as manufacturers moderated their production certain models ahead of an anticipated cut in GST.

Passenger Vehicles Face Headwinds

Passenger vehicle sales experienced a notable decline, dropping 8.8% to 3.22 lakh units in August 2025 compared to August 2024. This downturn was attributed to recalibration of dispatches by passenger vehicle manufacturers, according to SIAM Director General Rajesh Menon.

The passenger car segment saw a 7.9% decline in production to 1.25 lakh units, while utility vehicles production fell 1.8% to 2.25 lakh units. Despite production challenges, exports in the passenger vehicle category showed strong growth of 24.6%.

Two-Wheelers Drive Growth

The two-wheeler segment emerged as a bright spot, posting 7.1% growth with sales of 18.34 lakh units in August 2025. Within this category:

Scooters led the growth trajectory with a strong 12.7% increase to 6.83 lakh units, while motorcycles contributed solid gains of 4.3% to reach 11.07 lakh units. However, the entry-level moped segment experienced a marginal decline of 1.5%, indicating some softness in the most affordable two-wheeler category.

Three-Wheelers Hit Record High

Three-wheelers achieved their highest-ever August sales, growing 8.3% to 76,759 units. The segment showed particularly strong performance in:

Passenger carriers showed robust growth of 8.8% reaching 63,854 units, while goods carriers demonstrated even stronger momentum with a 15.6% increase to 9,751 units. The electric vehicle segment within three-wheelers displayed dramatic variation, as e-carts achieved a remarkable 362.9% surge to 810 units, reflecting the growing adoption of electric commercial vehicles for last-mile delivery services.

However, e-rickshaw sales declined significantly by 49.4% to 1,344 units.

Commenting on the performance, SIAM's Rajesh Menon highlighted the potential positive impact of the government's recent decision to reduce GST rates on vehicles. "The landmark decision of Government of India to reduce the GST rates on vehicles will go a long way in enabling broader access to mobility and inject fresh momentum into the Indian automotive sector in the upcoming festive season," he stated.

Year-to-Date Performance

For the April-August 2025 period, the industry showed resilience:

• Total production: 1.28 crore units (4.6% growth)
• Domestic sales: 99.80 lakh units (0.8% decline)
• Exports: 25.37 lakh units (25.3% growth)

The export performance has been particularly strong, with two-wheelers leading the charge with 26.2% growth in exports during the five-month period.

Key industry players showed varied performance across segments. Maruti Suzuki remained the dominant passenger vehicle manufacturer despite facing production challenges, while Hero MotoCorp and Honda continued to lead the two-wheeler segment with their strong brand presence and diverse product portfolios. Bajaj Auto maintained its competitive position across both two-wheelers and three-wheelers, demonstrating the company's strategic diversification across multiple vehicle categories.

Outlook

With the festive season approaching and supportive government policies in place, the industry expects improved momentum in the coming months. The reduced GST rates are anticipated to boost consumer demand, particularly in the passenger vehicle segment, which has been facing headwinds in recent months.

The strong export performance across categories also indicates the growing competitiveness of Indian automotive manufacturers in global markets, providing an additional growth avenue beyond domestic demand.