Car sales jump 10% to 4.4 million in breakout year of 2025: FADA

Retail sales of passenger vehicles rose 9.7% year-on-year (YoY) to 4.47 million units in the calendar year 2025, compared to 4.07 million units in the previous year, according to data released by the Federation of Automobile Dealers Associations (FADA).

Sales of electric cars jumped 77% YoY to 176,817 units in 2025, aided by a slew of electric vehicle launches by carmakers. EV penetration jumped to 3.95% in 2025 from 2.45% in 2024. While the share of diesel-powered cars remained constant at 18%, the share of petrol or gasoline cars declined from 52.32% in 2024 to 48.52% in 2025. CNG cars accounted for 21% of total sales, up from 18% a year ago.

Two-wheeler sales crossed the 2 million mark for the first time since the Covid-19 pandemic, growing 7.2% YoY to 2.02 million units in 2025.

The year was a tale of two halves, according to FADA. “January to August remained subdued despite supportive macro cues such as direct tax relief in the Union Budget and RBI’s cumulative rate easing through 2025. During this phase, customers stayed value-conscious and financier approvals remained selective in pockets, resulting in uneven conversions across markets,” said FADA President C S Vigneshwar.

The turning point came from September, when the landmark GST 2.0 rate rationalisation—including meaningful reductions for mass segments like small cars, two-wheelers (up to 350cc), three-wheelers and key commercial categories—improved affordability and lifted sentiment, leading to a clear upshift through September–December, Vigneshwar added.

The year saw broad-based participation—urban retail grew 8.20% and rural 7.31%—and within PVs, rural demand was a standout, growing 12.31% versus 8.08% in urban markets, underlining the strengthening spread of personal mobility beyond metros, the FADA president said.

The share of electric vehicles moved up in two-wheelers, passenger vehicles, commercial vehicles and remained dominant in three-wheelers, while CNG strengthened its presence in PV and CV, signalling a more diversified mobility mix, said FADA.

Except construction equipment, all categories showed growth with tractors clocking a double-digit growth rate of 11.52% in 2025. Construction equipment sales de-grew 7% to 74,029 units in 2025. Commercial vehicle sales rose 7% to 1 million units.

In December 2025, passenger vehicle sales grew 26.6% year-over-year to 379,671 units. “The month clearly benefited from the continued positive sentiment post GST 2.0, yearend offers, and a fair amount of pre-buying ahead of expected price revisions in January, helping dealers convert enquiries and spillover bookings in a time-bound manner,” Vigneshwar said. Inventory for PVs is currently around 37–39 days which reduced by around 7 days from previous month.

“In two-wheelers, retail was up 9.50% YoY. While demand stayed steady, the month was also shaped by select supply constraints and model-wise availability, with many customers advancing their purchase decisions due to impending price increases. It is encouraging to see the transition continue—EV share in 2W improved to 7.40% (vs 6.13% last year), reflecting rising acceptance, especially in urban markets where growth remained stronger than rural on the back of better liquidity flow,” said the FADA president.

Commercial Vehicles witnessed a robust month, registering 24.6% growth in December. “The momentum was led by underlying economic activity, improved goods movement and sustained demand in the load segment, with MCV growth particularly strong and LCVs/HCVs also reporting healthy expansion. Passenger carrier demand remained supportive as well. That said, we continue to flag financing turnaround time and approval selectivity as a friction point in parts of the market—something that needs sharper focus to sustain momentum,” he said.

In its near-term outlook, FADA said January is likely to be two-paced—a seasonally softer first half, followed by a stronger second half as the “lean” phase ends and buying typically picks up post Makar Sankranti/Pongal and into the marriage season, further aided by ongoing enquiries and booking pipelines.