The Indian auto sector concluded the final quarter of 2025 on a positive note, benefiting from GST support, improved macroeconomic conditions, and favorable rural sentiment. Despite a slight decline in sales post the festive season, year-on-year growth remained robust in most segments, indicating sustained demand. Retail traction, especially in passenger vehicles, commercial vehicles, tractors, and three-wheelers, remained strong even after the festive period, as per the December 2025 Auto Sales Report by Asit C. Mehta Investment Interrmediates Ltd (ACMIIL).
Passenger vehicles emerged as a significant growth driver, supported by GST rate reductions, year-end discounts, and pre-buying before January price revisions. While domestic sales saw a surge, exports lagged for some manufacturers. Data from Axis Securities revealed a 27% year-on-year increase in domestic passenger vehicle sales in December 2025, with a cumulative growth of about 6% year-on-year.
Commercial vehicles also displayed early signs of an upcycle, with improved fleet utilization, increasing freight activity, and infrastructure-driven demand contributing to growth. Domestic commercial vehicle volumes grew by 26% year-on-year in December, marking the second consecutive month of strong performance. Axis Securities anticipates high single-digit growth in the commercial vehicle industry in FY26, primarily driven by bus segment demand.
The two-wheeler segment witnessed substantial year-on-year growth, albeit with varying performances among manufacturers. Three-wheelers continued their upward trajectory, supported by a steady domestic recovery and robust export demand, posting approximately 80% year-on-year growth in December. Tractor demand remained robust, buoyed by increased rabi sowing, favorable minimum support prices, healthy rural liquidity, and positive farm sentiment.
