Indian Auto Sector Records Retail Growth in October 2025 Led by GST Reforms: ICRA

The Indian automobile industry recorded growth in retail sales in October 2025, with commercial vehicles posting a 17.7% year-on-year increase and two-wheelers achieving a 51.8% year-on-year surge, driven by GST 2.0 reforms that reduced tax rates, festive demand, and improved rural purchasing, according to ICRA reports.

The commercial vehicle sector reported retail volumes growing 17.7% year-on-year and 49.5% sequentially in October 2025. Light commercial vehicles recorded retail volume growth of 29.8% year-on-year and 64.3% sequentially, supported by logistics demand from rural areas, GST reforms, and festive buying.

Medium and heavy commercial vehicles recorded a 1.4% year-on-year decline in retail sales as fleet operators postponed purchases ahead of BS-VII norms, though sequential growth of 26.0% indicated pent-up demand release following the GST announcement.

Domestic commercial vehicle wholesale volumes increased 11.4% year-on-year in October 2025, with 7.8% sequential growth. Wholesale volumes for the first seven months of FY2026 grew 4.5% year-on-year, driven by increased freight movement and infrastructure development momentum.

ICRA projects the Indian commercial vehicle industry to register 3-5% year-on-year growth in wholesale volumes in FY2026, supported by the resumption of construction and infrastructure activities and stable economic conditions.

The domestic two-wheeler market recorded retail sales growth of 51.8% year-on-year in October 2025, driven by GST rate cuts, festive demand, and rural offtake. Electric two-wheeler retail volumes reached 144,365 units, representing a 4% year-on-year increase, with segment penetration remaining at 6-7%.

Two-wheeler wholesale dispatches increased 1.5% year-on-year to 2.1 million units in October 2025, reflecting a high base effect from the previous year. Wholesale volumes remained flat during the first seven months of the fiscal year.

Export shipments reported 17.8% year-on-year growth in October 2025. Industry export volumes for the seven-month period of FY2026 from April to October grew 23.0%.

ICRA estimates domestic two-wheeler volumes will register 6-9% year-on-year growth in FY2026, supported by improved replacement demand following GST rate cuts, expected urban sentiment recovery, and healthy rural incomes.