India’s automobile industry recorded a strong expansion in the October–December 2025 quarter of FY26, with total domestic vehicle sales rising 17.6% year-on-year (YoY) to 7.48 million units, compared with 6.36 million units in the year-ago period, according to data released by the Society of Indian Automobile Manufacturers (SIAM).

As per the industry body, total vehicle production during the quarter increased 16.4% to 8.84 million units, while exports jumped 24.7% to 1.75 million units, underlining India’s growing role as a global automobile manufacturing and export hub.

SIAM attributed the strong performance to a combination of policy-led demand support, easing financing conditions, and improved consumer sentiment during the festive quarter.

Commenting on the full-year performance, SIAM President Shailesh Chandra said 2025 was a “landmark year for the Indian auto industry,” with growth becoming broad-based across segments following structural policy reforms, improved affordability and easing interest rates.

PVs post record Q3, SUVs lead growth

Passenger vehicles (PVs) remained the primary growth engine. Domestic PV sales rose 20.6% to a record 1.28 million units in Q3 FY26, marking the segment’s highest-ever Q3 performance. Utility vehicles (UVs) continued to lead, with domestic UV sales climbing 20.9% to 8.52 lakh units, reflecting sustained consumer preference for SUVs.

SIAM noted that improved affordability following GST rate reductions, income tax relief and successive repo rate cuts played a key role in supporting demand.

The momentum extended into December, with passenger vehicle sales rising 26.8% year-on-year to 3.99 lakh units, even as exports moderated due to higher domestic absorption. For the calendar year 2025, PV sales reached 44.9 lakh units, up 5%, the highest-ever annual volume for the segment.

CVs benefit from freight and infrastructure activity

Commercial vehicles (CVs) also posted a sharp rebound. Q3 domestic CV sales increased 21.5% to 2.90 lakh units, the highest ever for the quarter, supported by higher freight movement and infrastructure-led demand.

Exports rose 13.6% during the quarter, with SIAM highlighting steady demand from neighbouring countries and the Middle East.

GST 2.0 reboots automobile sales

The SIAM President said the reduction in GST rates made vehicles more affordable and added momentum to the sector. “The reduction of GST rates made vehicles more affordable and injected fresh momentum into the sector,” Chandra said.

“Growth during the year has been broad-based across segments, with passenger vehicles, commercial vehicles and three-wheelers recording their highest-ever sales, and two-wheelers posting the second-highest sales ever in a calendar year,” he added.

Three-wheelers see export-led upside

Three-wheelers delivered another standout performance. Q3 domestic sales grew 14% to 2.15 lakh units, while exports surged 70.1% to 1.27 lakh units, aided by strong demand from Sri Lanka and African markets.

December volumes reflected continued traction in passenger carriers amid rising urban and semi-urban mobility needs.

Two-wheelers cross milestone as urban demand strengthens

Two-wheelers, the industry’s volume backbone, crossed a major milestone. Q3 domestic sales rose 16.9% to a record 5.70 million units, while December sales jumped 39.4% to 1.54 million units, led by scooters.

SIAM said urban demand remained the key driver, with scooters outpacing motorcycles due to changing mobility preferences.

Industry outlook for Q4 and FY26 remains positive

SIAM said the automobile industry entered the fourth quarter of FY26 with firm momentum after strong double-digit growth across all vehicle segments in the latter part of 2025. The industry body expects steady traction in both wholesale and retail volumes through the quarter.

Looking ahead, SIAM Director General Rajesh Menon said the industry enters Q4 FY26 with firm momentum and expects demand to remain steady, supported by healthy bookings, policy tailwinds and stable macroeconomic conditions, while remaining watchful of geopolitical risks.