The auto market in India recorded a remarkable rise in passenger car sales at the end of 2025 as a result of the rising demand among consumers. Small cars and SUVs tax cuts encouraged the consumers to buy their vehicles early before prices were likely to go up.
Manufacturers reported record dispatches in December, pushing annual sales to new highs and improving overall market momentum. Consumer interest remained high across urban and semi-urban regions, boosting vehicle orders before the year closed.
December Sales Surge Across Top Automakers
India’s leading carmakers reported sharp growth in December vehicle dispatches to dealers. Maruti Suzuki’s small car sales rose 50% to over 92,900 units.
Total domestic sales for Maruti jumped 37% to 178,646 units. The company also has a backlog of about one and a half months for its most affordable models.
In December, Tata Motors registered a domestic sale growth of 13%. Such popular models like Nexon, Punch or Tiago led to the growth. The increase in utility vehicle demand played out in favor of Mahindra in contributing to growth of sales.
The dispatches of Hyundai India did not experience substantial fluctuations as the company reported that things did not change much in market expansion. Industry leaders said that the end of year rush could be attributed partly to the acceleration of purchases by the buyers before the price changes.
Some of the car manufacturers posted the highest sales in the month of December. This good performance was boosted by the combined effect of discounts, GST benefits and consumer interest.
Tax Cuts Drive Consumer Demand
India reduced the goods and services tax on small cars from 28% to 18% in September. Larger-engine SUVs received a GST cut from 50% to 40%. These measures encouraged early vehicle purchases ahead of planned price hikes in January 2026.
Market dynamics were visible in the case of the changes in GST. Consumers were also interested in small cars and SUVs. Industry officials observed that the demand started to increase steadily since October since the reduction of the taxes.
The combined effect of policy support and market readiness contributed to higher year-end dispatches. SUVs accounted for 55.8% of total passenger vehicle sales in 2025, compared with 53.8% in 2024.
Small car sales also showed early signs of recovery following the tax cuts. Discounts and attractive financing options helped sustain consumer interest throughout the final quarter.
Overall Automotive Sector Growth
In 2025, passenger vehicle wholesales rose by 5.7% to approximately 4.55 million vehicles. December was alone more than 4 lakh units and year-on-year, this is up by 26%. The officials in the industry emphasized that expansion was still uneven and that demand was at a low level in the first half of the year.
ICRA had seen a projection of 1% to 4% growth in volume wholesale in FY26. This growth will be supported by new models coming in the market, a continued momentum in the market, and a better consumer mood.
In November three-wheeler sales recorded an increment of 21.3% to 71999 units and two-wheelers recorded an increment of 21.2 to 194475 units sales. The sales of scooters rose by 29.4% and this shows good demand in urban areas. The sale of the motorcycles saw an increment of 17.5% as well with the rural and the semi-urban purchase.
According to industry analysts, the prospects of further growth until 2026 are high as the policy remains supported. Furthermore, there is provision of vehicle financing facilities and as the market attains long term interest. The cumulative impact of the tax cuts, model upgrade and offers made consumer confidence to be revived.
