December deals, CAFE 3 clearance: Better times ahead for car buyers
With passenger vehicle inventory at 43-45 days, automakers and dealers are likely to sweeten year-end offers to clear unsold stock. The upcoming CAFE 3 norms from April 2027 could add to the urgency, particularly for older petrol and diesel models
- Nov 6, 2026,
- Updated Nov 6, 2026 7:08 PM IST
A year after a Goods and Services Tax (GST) rate cut led to record passenger vehicle sales, carmakers and dealers are likely to rely increasingly on year-end discounts and promotional offers to drive sales over the next two months and avoid carrying excess stock into the new year.
The Federation of Automobile Dealers Associations (FADA), in its October 2026 vehicle retail report released on November 6, said sales during the December-January period would depend on year-end offers, fresh launches and how quickly manufacturers can supply the right vehicle variants.
Passenger vehicle inventory stood at around 43-45 days at the end of October, unchanged from September.
Discounts are expected to increase in the coming months, with particularly attractive deals likely in December as carmakers and dealers look to clear inventory that has risen for four consecutive months, said Puneet Gupta, Director, India & ASEAN Automotive Market at Mobility Global.
“Inventory is building up. Somewhere, this inventory pressure will explode. Generally, this happens during the month of December because dealers also try to give their best deals so that they get rid of their old stock,” Gupta explained.
While newly launched models are largely being sold without discounts, substantial offers are available on models nearing the end of their lifecycle. “There are certain models, which are primarily at the end of their lifecycle, where we are seeing good discounts. The important thing is discounts are expected to go up in the next two months, especially in December,” said Gupta.
Discounts on popular models and electric vehicles are almost non-existent. Hybrids, however, are seeing some discounts as demand has fallen short of industry expectations, according to Gupta.
The expected increase in discounts marks a shift from last year, when there were no significant offers following the implementation of GST 2.0 in September 2025.
Carmakers may also seek to clear older stock ahead of the next phase of Corporate Average Fuel Efficiency (CAFE) norms, which comes into effect in April 2027.
“With CAFE3 norms, companies won’t be able to sell as many petrol and diesel vehicles as they like. Post April 2027, they will have to manage the powertrain portfolio. If they are not able to meet the norms, then they will have to pay a penalty. Companies will have to manage the model mix and the powertrain mix,” said Gupta. He added that automakers may offer larger discounts to boost EV sales once the CAFE 3 norms take effect in April 2027.
Passenger vehicle wholesales—shipments from factories to dealerships—outpaced retail sales in October. Retail sales stood at 5,07,768 units, down 14% year-on-year, while dispatches from manufacturers to dealers rose 12% to 5,28,384 units.
According to FADA, the decline in retail sales was largely due to a high base: both Navratri and Diwali fell in October last year, while the GST 2.0 rate cut also helped unleash pent-up demand. FADA expects inventory levels to fall to around 30 days by the end of the calendar year as festive demand continues.
While discounts may deepen in the coming months, automakers are expected to shift their focus next year from chasing volumes to protecting profitability as rising costs of commodities such as steel, copper and rubber put pressure on margins, said Gupta.
A year after a Goods and Services Tax (GST) rate cut led to record passenger vehicle sales, carmakers and dealers are likely to rely increasingly on year-end discounts and promotional offers to drive sales over the next two months and avoid carrying excess stock into the new year.
The Federation of Automobile Dealers Associations (FADA), in its October 2026 vehicle retail report released on November 6, said sales during the December-January period would depend on year-end offers, fresh launches and how quickly manufacturers can supply the right vehicle variants.
Passenger vehicle inventory stood at around 43-45 days at the end of October, unchanged from September.
Discounts are expected to increase in the coming months, with particularly attractive deals likely in December as carmakers and dealers look to clear inventory that has risen for four consecutive months, said Puneet Gupta, Director, India & ASEAN Automotive Market at Mobility Global.
“Inventory is building up. Somewhere, this inventory pressure will explode. Generally, this happens during the month of December because dealers also try to give their best deals so that they get rid of their old stock,” Gupta explained.
While newly launched models are largely being sold without discounts, substantial offers are available on models nearing the end of their lifecycle. “There are certain models, which are primarily at the end of their lifecycle, where we are seeing good discounts. The important thing is discounts are expected to go up in the next two months, especially in December,” said Gupta.
Discounts on popular models and electric vehicles are almost non-existent. Hybrids, however, are seeing some discounts as demand has fallen short of industry expectations, according to Gupta.
The expected increase in discounts marks a shift from last year, when there were no significant offers following the implementation of GST 2.0 in September 2025.
Carmakers may also seek to clear older stock ahead of the next phase of Corporate Average Fuel Efficiency (CAFE) norms, which comes into effect in April 2027.
“With CAFE3 norms, companies won’t be able to sell as many petrol and diesel vehicles as they like. Post April 2027, they will have to manage the powertrain portfolio. If they are not able to meet the norms, then they will have to pay a penalty. Companies will have to manage the model mix and the powertrain mix,” said Gupta. He added that automakers may offer larger discounts to boost EV sales once the CAFE 3 norms take effect in April 2027.
Passenger vehicle wholesales—shipments from factories to dealerships—outpaced retail sales in October. Retail sales stood at 5,07,768 units, down 14% year-on-year, while dispatches from manufacturers to dealers rose 12% to 5,28,384 units.
According to FADA, the decline in retail sales was largely due to a high base: both Navratri and Diwali fell in October last year, while the GST 2.0 rate cut also helped unleash pent-up demand. FADA expects inventory levels to fall to around 30 days by the end of the calendar year as festive demand continues.
While discounts may deepen in the coming months, automakers are expected to shift their focus next year from chasing volumes to protecting profitability as rising costs of commodities such as steel, copper and rubber put pressure on margins, said Gupta.