Thursday, October 16, 2025
By CarKhabri Team
2025: Re-shaping The Indian Automotive Industry
The year 2025 has emerged as a milestone for India’s automotive sector. Attributes such as government initiatives, changing consumer preferences, and technological breakthroughs have set a benchmark for the industry over the next decade. From small cars and two-wheelers to luxury SUVs and EVs, the market entered a new era of innovation and inclusivity.
GST 2.0 Reforms: A Game-Changer for the Auto Market
One of the most notable determinants which has played a significant role in changing the shape of the automotive sector in 2025 is the implementation of GST 2.0, which recalibrated the taxation framework for automobiles. As a part of the new GST structure, the tax on small cars was reduced from 28% to 18%, making affordable vehicles more accessible for middle-class Indian families.
Similarly, larger cars (above 4 meters) and premium motorcycles (above 350cc) were taxed at a fixed 40%, ensuring greater predictability in pricing and simplified compliance for dealers. This reform not only rejuvenated demand but also empowered automakers to roll out attractive festival-season offers.
Auto Retail Sees Steady Growth in FY’26
India’s automobile retail sector maintained a consistent progress in the first half of FY’26 (April–September 2025), recording a 3.42% YoY growth, with 1.23 crore units of vehicle registrations.
- Two-wheelers recorded sales of 88.37 lakh units. This was 3.07% higher than FY 2024-2025. This hike was driven by rural demand and favourable financing.
- Passenger vehicles recorded sales of 19.50 lakh units, growing 3.67%, supported by strong SUV and hybrid sales.
- Demand for Tractors rose to 10.68% to 4.49 lakh units, signalling a rural market rebound.
- The same trend was witnessed in three-wheelers, which recorded a hike of 3.86%. This was due to the adoption of electric mobility in cities.
- Commercial vehicles saw a modest 2.56% rise, reflecting stable infrastructure activity.
With the ongoing festive season, auto dealers are optimistic of recording increased sales throughout the year.
Tata Motors Reclaims No. 2 Spot
The festival season of 2025 proved to be a turning point for Tata Motors, which reclaimed its No. 2 position in India’s passenger vehicle market on the back of record SUV and small car sales.
In September 2025, Tata Motors achieved its highest-ever monthly sales — 60,907 units, up 47% YoY. The Tata Nexon led this success, crossing 22,500 units, the highest monthly sales for any Tata model.
As per FADA Vice President Sai Giridhar, Navratri 2025 marked “a true Bachat Utsav” for the auto industry, with retail sales soaring 34% YoY. This surge reflected the combined effect of GST cuts, festive incentives, and aspirational purchasing trends among new buyers.
EV Revolution: Electrification Gains Momentum
The electric vehicle (EV) segment gained significant traction, fuelled by the 5% GST rate and rising environmental awareness. Automakers such as BYD, Tata, MG Motor, and Mahindra expanded their EV portfolios, while startups like Ola Electric, Ultraviolette, and Oben catered to urban buyers with affordable e-scooters and bikes.
Despite persistent challenges like battery costs and supply chain dependency, EV adoption in cities accelerated, marking a fundamental shift in India’s mobility choices.
Entrance of International Manufacturers in the EV Segment
Tesla officially entered India in July 2025, launching its Model Y from its first retail outlet in Mumbai’s Bandra Kurla Complex. Priced around ₹60 lakh, it competes in the premium EV segment alongside BYD Seal, Hyundai Ioniq 5, and Volvo XC40 Recharge. While Tesla’s entry signals India’s growing global importance, Vietnam’s VinFast also made headlines with its VF 6 and VF 7 SUVs and the inauguration of a 400-acre EV plant in Tamil Nadu. With a capacity of 50,000–150,000 units, the facility positions India as a key right-hand-drive export hub for VinFast’s global network.
The Road Ahead: India’s Automotive Future
With over 4.3 million passenger vehicles sold in 2025, India is now the world’s third-largest auto market. The next phase of growth will focus on technology, sustainability, and localisation. Government initiatives like the EV Policy and PLI Scheme are accelerating investments in battery production, semiconductors, and hydrogen fuel cells. Automakers are moving toward software-defined vehicles equipped with AI, telematics, and OTA updates.
However, challenges such as charging infrastructure, battery raw material dependency, and EV affordability remain hurdles to mass adoption. Even so, the decade ahead promises to transform India from a low-cost manufacturing hub into a mobility innovation powerhouse.
As the nation accelerates toward a cleaner, smarter, and more connected future, 2025 will be remembered as the year India’s automotive transformation truly began.
Comments (0)