India Auto Retail Grows 7.7% in CY2025, Dec Sales Surge Over 14%: FADA

India’s automobile retail market closed CY2025 on a positive trajectory, with total vehicle retails reaching 28.16 million units, marking a 7.71 percent year-on-year (YoY) growth, according to data released by the Federation of Automobile Dealers Associations (FADA). The year was characterised by a subdued first half followed by a visible recovery from September onwards, supported by GST 2.0 rationalisation, improved affordability and a pick-up in consumer sentiment.

December 2025 capped the year on a strong note, with retail volumes of 20.29 lakh units, reflecting a 14.63 percent YoY growth, primarily boosted by year-end offers, inventory liquidation and pre-buying ahead of expected price hikes in January. 

Passenger Vehicles: Rural Demand Drives Growth

Passenger Vehicles (PVs) emerged as one of the strongest performers in both December and the full calendar year. In CY2025, PV retails stood at 44.75 lakh units, up by 9.70 percent YoY, with rural markets significantly outperforming urban centres. Rural PV demand grew by 12.31 percent, compared to 8.08 percent growth in urban areas, highlighting the widening penetration of personal mobility beyond metros.

In December 2025, PV retails rose sharply by 26.64 percent YoY to 3.80 lakh units. Dealers benefited from improved model availability, attractive schemes and a reduction in inventory levels to around 37–39 days, nearly a week lower than the previous month. The fuel mix also continued to diversify, with CNG accounting for around 21 percent and EVs close to 4 percent of PV retail.

Two-Wheelers: Steady Growth Amid Transition

The two-wheeler segment, which forms the backbone of India’s auto retail market, recorded CY2025 sales of 20.30 million units, growing 7.24 percent YoY. While demand remained value-conscious during the early part of the year, affordability improvements post GST 2.0 helped stabilise volumes in the latter months.

In December 2025, two-wheeler retail rose 9.50 percent YoY to 13.17 lakh units, despite a sequential decline due to seasonal factors. More Importantly, electric two-wheelers continued to gain traction, with EV penetration increasing to 7.40 percent in December, up from 6.13 percent a year earlier, signalling rising acceptance, particularly in urban markets.

Commercial Vehicles: Broad-Based Recovery Led by MCVs

Commercial Vehicles (CVs) delivered a healthy performance in 2025, with CY2025 retails of 10.10 lakh units, up 6.71 percent YoY. Growth was led by Medium Commercial Vehicles (MCVs), which expanded by nearly 20 percent YoY, reflecting improved freight movement and economic activity.

December 2025 saw CV retails grow 24.60 percent YoY to 83,666 units, with strong momentum across LCVs, MCVs and passenger carriers. However, FADA highlighted financing turnaround time and selective approvals as continuing friction points that could cap near-term upside if not addressed.

Three-Wheelers and Tractors: EV Adoption and Rural Strength

Three-wheelers recorded CY2025 sales of 13.10 lakh units, up 7.21 percent YoY, with electric models firmly dominating the segment. EVs accounted for over 60 percent of three-wheeler retails during the year, underlining India’s rapid transition in last-mile mobility. December volumes grew an impressive 36.10 percent YoY, driven by passenger and e-rickshaw categories.

Tractor sales also reflected strong rural fundamentals, with CY2025 retails of 9.97 lakh units, registering 11.52 percent YoY growth. December tractor retails rose 15.80 percent YoY, supported by healthy agricultural activity and improved farm cash flows 

Positive headwinds for CY2026

Dealer sentiment remains constructive heading into 2026. FADA’s survey indicates that nearly 78 percent of dealers expect growth in CY2026, supported by festival and marriage-season demand, continued rural traction and supportive macro conditions, including lower interest rate. However, disciplined inventory management, timely supply and faster finance approvals will be critical to sustaining momentum.

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