New Delhi: Consumers rushed to showrooms to pick their choicest cars and motorcycles following unprecedented tax cuts and festive offers, propelling automobile retail sales to a record this Navratri.
Retail sales, counted as vehicle registrations, climbed 34% to 1.16 million vehicles during the Navratri festive season spanning September 22 to October 2 this year compared with the year-earlier festive period, showed data collated by the Federation of Automobile Dealers Associations (Fada) from the government’s Vahan portal.
Automobile sales spiralled across all major categories – passenger cars by 35%, two-wheelers by 36%, commercial vehicles by 15%, and tractors by 19%. A surge in consumer sentiment thanks to reduction in goods and services tax (GST) rates, income tax slab revisions in the budget, and lower interest rates is helping spur demand.
For the entire September, automobile retail sales across categories increased by 5.2% to 1.83 million units, despite tepid demand in the first three weeks ahead of the GST 2.0 transition.
The government cut taxes on passenger vehicles less than 4 metres in length, two-wheelers (with engine capacity less than 350cc) and commercial vehicles to 18% from 28% starting September 22. Larger vehicles or those measuring more than 4 metres in length are now taxed at a special rate of 40% compared to 43-50%, including compensation cess earlier.
“September 2025 was an exceptionally unique month for India’s automobile retail industry,” said Sai Giridhar, vice president, Fada.
“The first three weeks were largely muted, with customers holding back in anticipation of the GST 2.0 reforms. However, the dynamics changed dramatically in the final week as Navratri festivities coincided with the implementation of lower GST rates, reviving customer sentiment and accelerating deliveries across most vehicle categories.”
The month ended in positive territory with all segments except three-wheelers and construction equipment showing growth. Construction equipment sales fell by 19%, while three-wheelers decline by 7.2% last month.
Giridhar said the reduction in GST rates, coupled with festive demand, led to renewed enquiries and bookings, although limited billing days restricted the full potential of the rebound.
“The combination of above-normal monsoon rains, a strong kharif harvest, and stable policy rates has boosted both rural and urban purchasing power,” he said. “This unique alignment of favourable economic, climatic, and policy factors is set to propel sentiment to record levels, turning this Dhanteras and Deepawali into a celebration.”
Stock levels in the passenger vehicle segment swelled to around 60 days with dealers preparing to meet peak festive demand in October. This month will feature the key Hindu festival of Diwali, synonymous with increased purchases of consumer goods like cars and televisions.
While improved affordability among entrylevel consumers and pent-up demand drove two-wheeler retail sales by 6.5% in September, in the passenger vehicle segment too, newer customers entering the mainstream market boosted numbers. Existing consumers also moved to upgrade their cars as higher variants became more accessible, dealers said.
Total passenger vehicle sales grew by 5.8% to 299,369 units in September. With financing resuming and government enhancing infrastructure spending, commercial vehicle sales rose by 2.7% last month.
Giridhar said the festive spirit is already evident — Dhanteras and Diwali are expected to deliver all-time high sales — with dealerships fielding a flood of enquiries and bookings across two-wheelers, passenger vehicles, and commercial vehicles.
“Affordable prices post-GST 2.0, coupled with aggressive OEM offers and easy finance availability, have drawn a new wave of firsttime buyers into showrooms, even as upgraders opt for premium variants,” he said, underlining that “If the logistics and transport ecosystem performs seamlessly, this could well be the best festive retail season India has ever experienced.”
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