Indian Car Sales Analysis for CY2025

Highlights

• 2025 registered the highest-ever wholesale of 45,29,913 vehicles, with improvement in growth rate to 5.7%

• 3% to 13% GST reduction across various PV categories in September 2025 is the major growth driver in 2025

• 4,66,318 vehicle sales made October 2025 the best sales month in history

• The Maruti Dzire became the best-selling car in 2025

• Mahindra became the second-largest carmaker in 2025

• All manufacturers offered discounts to prop up sales in 2025

Indian mass market passenger vehicle industry

The Indian passenger vehicle industry posted the highest-ever wholesale of 45,29,913 cars (dispatches from brands to their dealers) in 2025, with an improvement in the growth rate to 5.7% compared to 4.6% in 2024.

2025 Growth

India's GDP growth rate slowed to 5.4% in Q3 2024 (CY), well before global trade tensions emerged. The government introduced both fiscal (personal income tax slab changes) and monetary measures (a 1% RBI rate cut) in early FY 2025-26 to revive economic growth.

The economic growth slowdown has started reflecting in passenger car demand, as overall sentiment was subdued. Despite the slowdown in retail demand, several brands maintained high wholesales through early 2025, resulting in inventory build-up for several products across retail channels in India. In June, dispatches were reduced to correct some of the accumulated inventory.

In August, the government announced upcoming GST reforms, which resulted in the deferment of purchases, and automakers reduced wholesales and started building inventory at plants to cater to the ensuing pent-up demand. Post the GST reduction announcement, sentiment and demand picked up rapidly during the festive season and beyond, resulting in double-digit growth in the last quarter of 2025.

New GST Rates

The GST system came into existence in July 2017, subsuming the old excise duty and VAT, which were levied separately by the Central and State governments, respectively. However, multiple tax slabs and vehicle categorization based on fuel type, length, ground clearance, and engine size remained the same under the GST regime.

Until 21 September 2025, there were seven tax slabs, excluding fuel cell EVs, for passenger vehicles in India. Post GST amendments, the tax rate has now been reduced to three slabs. This has effectively reduced the tax burden by 3% to 13% across various PV categories.

GST reforms also laid down a long-term policy direction that primarily prioritizes EVs, while other options, such as hybridization, were kept on par with other combustion engine cars.

Lower tax on combustion engine cars led to relative sluggishness in the uptake of EVs in Q4 2025. A drastic drop of 11%–13% in GST on sub-4m combustion engine cars resulted in higher dispatches of CNG cars in Q4 2025. 

Decoding growth path

To better understand the growth trend, we at Autopunditz compiled the Indian passenger vehicle CAGR (Compound Annual Growth Rate) series using 2005 as a common base year. In H1 2025, the rate dropped to 7.3%, which was not a positive sign from a long-term perspective, especially as India’s GDP growth rate has slowed. Post GST reforms, Q4 2025 sales picked up, resulting in a slight improvement to 7.4%. If India continues at a 7.4% rate, it would reach the 64-lakh sales milestone by 2030. However, if this rate improves to 7.7%, as seen in 2022 and 2023, potential sales by 2030 could exceed 69 lakhs.

Brand Growth

Hereon, we will peel different layers to understand the deeper ramifications of growth on industry players.

Mahindra, Maruti, Toyota, Kia, Skoda, and MG launched all-new products in 2024 and 2025; as a result, they posted positive sales growth, leading to higher market share compared to 2024.

Mahindra outpaced the industry growth rate with significant volume and market share gains due to an ICE and EV product onslaught and secured the #2 position in 2025. Toyota’s growth was entirely driven by the addition of new cross-badged products from Maruti’s portfolio and incremental sales of the Toyota Innova Hycross strong-hybrid.

Brands that did not have anything new to offer or had a product portfolio with a weak value proposition witnessed either sluggish growth or suffered significant de-growth in 2025.

Products driving Industry Growth

Growth in 2025 was driven by products that were either entirely new or had undergone a facelift in 2024. The top 10 growth-driver list is dominated by products with SUV or crossover body styling.

Products that dragged down growth in 2024 comprised models for which either a facelift was due or whose value proposition was not aligned with current market expectations. A steep fall in Punch EV sales, along with the impending facelift for the ICE version, resulted in a massive drop in volume and rank for the Tata Punch.

2025 Fuel Analysis

There was a rapid 22% increase in CNG vehicle sales in 2025. The Tata Nexon, with its innovative dual-CNG tank, and the Maruti Dzire and Ertiga led the growth of CNG vehicles; the former is sold only as a personal vehicle, while the latter are sold mostly as taxis.

Diesel car sales growth in 2025 was driven by the introduction of the Mahindra Thar Roxx in 2024, along with incremental sales of the Hyundai Creta and Mahindra Scorpio.

EV sales growth was driven by new products launched in 2024 and 2025, whereas several older EV models suffered a volume decline. This also corroborates the fact that there is no first-mover advantage in the EV space at present, as the market is still in a nascent stage.

Strong-hybrid sales growth was driven by higher sales of the Toyota Innova Hycross and the introduction of the Maruti Victoris in Q4 2025. The drop in petrol car sales is largely due to substitution by other low running-cost fuel options such as CNG and EVs.

2025 : Impact on body style  

The SUV and crossover segment posted healthy volumes and growth in 2025, as brands focused heavily on this body style to address changing consumer preferences in India.

The facelifted Kia Carens introduced in 2025, along with higher sales of the Maruti Ertiga CNG and the Toyota Innova Hycross strong-hybrid version, increased overall MUV sales in 2025.

Lower GST rates in Q4 2025 uplifted sales of sub-4m cars and benefited the hatchback and sedan segments. Sedan segment growth was driven by the new generation of the Maruti Dzire and Hyundai Aura. The CNG versions of the Maruti Dzire and Hyundai Aura posted 32% and 16% growth, respectively. The hatchback segment share dropped to 23% in 2025 from 25% in 2024.

Way Forward

GST reforms uplifted sentiment across combustion engine categories of passenger vehicles in Q4 2025. The future growth path for 2026 will now depend on the sustainability of demand that in turn depends on evolving consumer sentiment, new product offerings and a revival in GDP growth on the back of the fiscal and monetary measures taken in FY 2025–26.