The strong performance in rural areas capped a year that saw total PV retail sales rise 9.70 percent to 44,75,309 units in calendar year 2025, with rural markets once again outperforming urban centers. For the full year, rural PV sales grew 12.31 percent, compared to 8.08 percent growth in urban areas, underscoring the sector’s increasing dependence on non-metro demand.
“India’s auto retail industry closed on a confident note, with total unit sales of 2,81,61,228 units, a year-on-year growth of 7.71%. However, the year was divided into two halves: from January to August, it remained subdued despite supportive macroeconomic signals such as direct tax relief in the Union Budget and the RBI’s cumulative rate cut through 2025. During this phase, customers remained value-conscious and lenders’ approvals remained selective in their wallet resulting in uneven conversions across markets,” said FADA president CS Vigneshwar.Total vehicle sales across all categories closed at 2,81,61,228 units in FY25, up 7.71 percent year-on-year, supported by a marked recovery in the second half of the year after a quiet period from January to August. FADA described 2025 as a “two-and-a-half year” and noted that demand strengthened from September after GST 2.0 improved affordability and improved consumer confidence.
December delivered a strong year-to-date for the sector, with total auto retail sales rising 14.63 percent year-on-year to 20,28,821 units. Besides PVs, growth was also seen in commercial vehicles (up 24.60 per cent), three-wheelers (up 36.10 per cent), two-wheelers (up 9.50 per cent) and tractors (up 15.80 per cent), while sales of construction equipment fell 18.54 per cent.
“The turning point came from September onwards, when the historic GST 2.0 rate rationalization – including meaningful reductions for mass segments such as small cars, two-wheelers (up to 350cc), three-wheelers and key commercial categories – improved affordability and improved sentiment, leading to a marked appreciation between September and December,” Vigneshwar said. FADA said inventory levels in the PV segment fell to around 37-39 days in December, around seven days lower than the previous month, indicating a healthier channel balance.
The data also showed that the transition to alternative fuels is accelerating. In calendar year 2025, CNG vehicles accounted for 21.30 percent of PV sales, while electric vehicles accounted for 3.95 percent. In December alone, PV-CNG penetration remained close to 21 percent, while EV share was around 4 percent.
“CY’25 also strengthened the upcoming transition with EV share rising in 2W, PV, CV and remaining dominant in 3W, while CNG strengthened its presence in PV and CV, signaling a more diversified mobility mix. Overall, CY’25 is ending on a festive note with stronger demand visibility, healthier research pipelines and a more confident consumer as we move into 2026,” FADA’s Vigneshwar added.
Looking ahead, sentiment among dealers remains constructive, FADA said. For January 2026, 70.48 percent of dealers expect growth, with momentum likely to pick up after Sankranti and Pongal and into the wedding season.
For the January-March quarter, 74.91 percent growth is expected, supported by festive demand, year-end purchases and continued traction in rural areas, FADA said, while citing financing turnaround times and availability of in-demand models as key considerations.
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