GST reforms, rural recovery drive auto sales in Q3

India’s automobile industry delivered a strong performance with passenger volumes up 20 per cent YoY in the October–December 2025 quarter, driven by GST reforms, a pickup in rural demand, and sustained festive momentum, a report said on Friday.

Financial services firm PL Capital said in a report that improved affordability, easier financing, and recovering consumer sentiment supported broad based volume growth across passenger vehicles, two wheelers, and commercial vehicles.

Passenger vehicle volumes rose due to GST led price cuts and year end discounts, while inventory days fell sharply to 45 days in November, about 38 in December, from over 55 earlier.

Small cars saw more pronounced benefits from GST cuts, even as SUVs continued to dominate demand, reinforcing the ongoing premiumisation trend.

Further, two wheelers recorded high teens growth, led by motorcycles in the 150cc and higher segments, with some models facing extended waiting periods due to strong retail sales and dealer restocking, the report said.

Commercial vehicles showed early signs of an upcycle during Q3FY26, supported by a revival in construction and mining activity after an extended monsoon season. Medium and heavy commercial vehicles outperformed light commercial vehicles as replacement demand picked up, and customers opted for higher-tonnage vehicles.

Improved affordability following GST rate rationalisation also encouraged fleet operators to advance purchase decisions, the report noted.