December auto sales surge 27% in India, marking strongest growth of 2025

Indian carmakers recorded their biggest monthly sales jump of 2025 in December, as tax cuts on vehicles made several models more affordable and boosted demand, industry data showed on Tuesday.

Sales to dealers rose 26.8 per cent in December, with carmakers dispatching 399,216 units during the month, according to figures released by the Society of Indian Automobile Manufacturers. For the full year, car sales increased by about 5 per cent, compared with growth of 4.2 per cent in 2024.

Car sales have gathered pace since September, when the government implemented tax cuts that reduced levies on sports utility vehicles with engine capacities above 1,500cc to 40 per cent from 50 per cent earlier, and lowered taxes on small cars to 18 per cent from 28 per cent.

During the October–December quarter, car dispatches climbed 21 per cent to a record 1.28 million units, supported by strong festive-period demand, traditionally considered an auspicious time for large purchases.

The stronger-than-expected momentum has led brokerages to raise their sales growth forecasts for the year ending March 2026. Nomura and Elara Capital now expect an 8 per cent increase in car dispatches.

At the start of fiscal 2026, carmakers had projected growth of just 1 per cent to 2 per cent, compared with a 2 per cent rise in the previous year, citing signs of cooling demand and rising competition.

However, manufacturers have said they expect growth momentum to continue in the final quarter of the fiscal year, driven by interest in newly launched models.