GST cuts, rural demand drive India’s record vehicle sales in October

India’s retail vehicle sales are expected to remain strong through the rest of 2025, the Federation of Automobile Dealers Associations (FADA) said on Friday, after tax cuts and robust rural demand lifted October sales to an all-time high.

October’s overall vehicle sales, the first full-month data since the simplification of the goods and services tax (GST) on 22 September, rose 40.5% year-on-year to more than 4.2 million units, according to FADA.

Vehicle sales had been muted during the first three weeks of September. The revised GST regime reduced tax on entry-level two-wheelers and cars from 28% to 18%, 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 C S Vigneshwar said. “Rates have returned to pre-COVID levels, which is fantastic for entry-level cars and overall growth.”

FADA said retail car sales in rural areas grew three times faster than in urban centres, while two-wheeler sales rose at twice the pace, driven largely by first-time buyers encouraged by lower tax rates.

Last week, market leader Maruti Suzuki said it expects small-car sales to grow faster than SUVs, which attract 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, adding that the upcoming wedding season, harvest-linked income, and new model launches would help 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% year-on-year, led by a 22% increase in two-wheeler sales and a 23% rise in passenger vehicles.

(With inputs from Reuters)