The third quarter of fiscal year 2025-26 witnessed the segment's best-ever quarterly performance, with dispatches reaching 12.76 lakh units—a robust 20.6% increase over Q3 of the previous fiscal year.
13 Jan 2026 | 251 Views | By Arunima Pal
India's passenger vehicle sector achieved its highest-ever annual wholesales in 2025, with a strong festive quarter acceleration propelling the industry to record dispatches of 44.90 lakh units, according to data released by the Society of Indian Automobile Manufacturers (SIAM) today.
The passenger vehicle segment registered a 5.0% growth in ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
India's passenger vehicle sector achieved its highest-ever annual wholesales in 2025, with a strong festive quarter acceleration propelling the industry to record dispatches of 44.90 lakh units, according to data released by the Society of Indian Automobile Manufacturers (SIAM) today.
The passenger vehicle segment registered a 5.0% growth in calendar year 2025 compared to 2024, with the exceptional performance largely driven by a remarkable surge in the October-December quarter. After navigating supply-side challenges and subdued demand in the first half, the industry witnessed a sharp turnaround in the latter part of the year.
The third quarter of fiscal year 2025-26 witnessed the segment's best-ever quarterly performance, with dispatches reaching 12.76 lakh units—a robust 20.6% increase over Q3 of the previous fiscal year. This represented the highest wholesale volumes ever recorded for any third quarter in the passenger vehicle industry's history.
December 2025 alone saw wholesales of 3,99,216 units, representing a substantial 26.8% year-on-year increase from December 2024's 3,14,934 units. The exceptional monthly performance underscored the strong festive season demand that characterized the latter part of 2025 and provided the momentum needed to push annual dispatches to record levels.
According to SIAM President Shailesh Chandra, the remarkable acceleration came after the industry navigated a challenging first half. "The year began with a subdued first half, and the industry continued to navigate supply side challenges. With multiple structural policy reforms including the income tax relief, successive repo rate cuts and the rollout of GST 2.0 laid the foundation for a positive demand environment," he said.
The implementation of GST 2.0, which included a reduction in GST rates on vehicles, emerged as a pivotal catalyst for the industry. The rate reduction improved vehicle affordability significantly and injected fresh momentum into the sector, making passenger vehicles more accessible to a broader consumer base. "The reduction of GST rates made vehicles more affordable and injected fresh momentum into the sector," Chandra noted.
Personal income tax relief measures enhanced purchasing power across income segments, while successive repo rate cuts by the Reserve Bank of India throughout 2025 eased financing costs for vehicle buyers. These monetary policy measures made auto loans more affordable, directly translating into increased demand during the critical festive buying season.
Industry observers noted that these reforms collectively created a renewed sense of optimism among buyers, particularly during the festive quarter. The convergence of improved affordability, enhanced disposable income, and easier financing created an ideal environment for vehicle purchases, helping the industry overcome the sluggish start to the year.
Within the passenger vehicle category, utility vehicles continued to dominate shipments with 29.54 lakh units dispatched in calendar year 2025, showing a healthy 7.4% growth over 2024. The utility vehicle segment's strong performance reflects the ongoing consumer preference shift toward SUVs and crossovers, which has been a defining trend in the Indian automotive market over recent years.
During the October-December quarter, utility vehicles recorded dispatches of 8.52 lakh units, marking a 20.9% increase over the same quarter last year. This segment alone contributed approximately two-thirds of total passenger vehicle wholesales during the quarter, highlighting its dominance in the market.
Passenger cars recorded wholesales of 13.79 lakh units during the calendar year, registering a modest 0.6% growth. While growth was subdued compared to utility vehicles, the segment maintained stable dispatch volumes despite intense competition from the utility vehicle category. In Q3, passenger cars saw dispatches of 3.81 lakh units, up 20.5% year-on-year.
Vans, which serve both personal and commercial mobility needs, saw dispatches of 1.55 lakh units in 2025, reflecting 1.1% growth over the previous year. During Q3, van wholesales reached 42,349 units, up 16.4% over the previous year's third quarter.
For the nine-month period of April-December 2025, passenger vehicle dispatches reached 33.27 lakh units, up 6.0% compared to the same period in fiscal 2024-25. This performance indicated steady momentum building through the fiscal year, with growth accelerating significantly in the final quarter of the calendar year.
The April-December data shows that while the industry experienced headwinds early in the year, the structural reforms implemented mid-year began showing results, with demand picking up progressively and culminating in the exceptional Q3 results.
The export front also witnessed remarkable growth, with passenger vehicles recording their highest-ever quarterly shipments of 2.25 lakh units in Q3 2025-26—an impressive 11.7% increase over the previous year's third quarter. This performance demonstrated the growing competitiveness of Indian automotive manufacturers in global markets.
For the full calendar year 2025, passenger vehicle exports reached an all-time high of 8.63 lakh units, registering 16.0% growth compared to 2024. The strong export performance was supported by steady demand across multiple geographies, with the Middle East, Africa, and Latin America emerging as particularly robust markets for Indian passenger vehicles.
The export success reflects the Indian automotive industry's increasing integration into global supply chains and the growing acceptance of Indian-manufactured vehicles in international markets. Manufacturers have been focusing on quality improvements and competitive pricing to strengthen their position in these overseas markets.
Looking ahead, industry leaders expressed confidence that the positive momentum would continue into 2026. "The industry enters Q4 2025-26 with firm momentum after strong double-digit growth and expects steady wholesale volumes traction through the quarter," said SIAM Director General Rajesh Menon.
Several factors are expected to sustain the growth trajectory into the new year. The year-end dispatch push, traditionally a period of high wholesale activity, is anticipated to maintain strong volumes. Additionally, healthy booking pipelines across manufacturers indicate robust near-term demand visibility.
The full transmission of 2025's multiple repo rate cuts into lending rates is expected to further enhance affordability for buyers, supporting continued demand growth. "Looking ahead, the industry expects the positive momentum to continue well into 2026, supported by stable macro-economic conditions, improving affordability and continued policy support," Chandra said.
Industry executives believe that stable macroeconomic conditions and continued policy support from the government will underpin growth into FY 2025-26, building on the strong foundation established in the latter half of 2025.
However, the industry remains watchful of global geopolitical developments that could impact supply chains and export volumes. "The industry will also continue to monitor geopolitical developments to ensure resilience in supply chain and export volumes," Chandra noted, acknowledging the external uncertainties that could affect future performance.
Despite these potential headwinds, the overall outlook remains positive, with policy-led tailwinds firmly in place to sustain the robust performance witnessed in the closing months of 2025. The combination of structural reforms, improving affordability, and supportive macroeconomic conditions positions the passenger vehicle industry for continued growth in the coming year.