By Kashish Tandon
(Reuters) -India’s retail vehicle sales should remain strong through the rest of 2025, an auto dealers’ body said on Friday, as tax cuts and strong rural demand boosted retail sales to a record high in October.
October’s overall vehicle sales, the first full-month numbers since goods and services tax (GST) was simplified on September 22, jumped 40.5% year-on-year to more than 4.2 million units, the Federation of Automobile Dealers Associations (FADA) said.
Vehicle sales had been muted the first three weeks of September. The new GST regime slashed the levy on entry-level two-wheelers and cars to 18% from 28% — a move aimed at reviving demand in the price-sensitive segment.
“I think small-car sales have been one of the breakthrough moments after the GST cut,” FADA President CS Vigneshwar said. “Rates have returned to pre-COVID levels, which is fantastic for entry-level cars and overall growth.”
Retail car sales in rural areas grew three times faster than in urban centres, while two-wheeler sales rose at twice the pace, FADA said, adding that the tax cuts encouraged first-time buyers.
Last week, market leader Maruti Suzuki said it expects small-car sales to grow faster than SUVs that have a 40% GST rate.
In October, passenger vehicle sales rose 11.4%, while two-wheeler sales surged nearly 52%, both at record-high levels, FADA said.
“We definitely know this growth is going to continue,” Vigneshwar said. FADA expects the upcoming wedding season, harvest-linked cash flows, and new model launches to sustain sales momentum through the rest of the year.
During the 42-day festive period through September and October, which included Dussehra and Diwali, overall retail sales rose 21% on-year, led by a 22% increase in two-wheeler sales and a 23% rise in passenger vehicles.
(Reporting by Kashish Tandon and Meenakshi Maidas in Bengaluru; Editing by Harikrishnan Nair)
