MUMBAI, INDIA – OCTOBER 18: Many people bought new cars at a car showroom in Thane on the auspicious day of Dhanteras on October 18, 2025 in Mumbai, India.
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India’s auto industry had a record strong month in October, underscoring a sharp recovery in domestic consumption that could offset the impact of slowing exports to the US
Total retail sales for all vehicle segments, from cars to tractors, rose 40.5% year-on-year, according to data from the Federation of Automobile Dealers Associations.
“Both cars and two-wheelers have hit lifetime highs, indicating renewed consumer confidence and strong economic undercurrents,” the industry body’s president CS Vigneshwar said in a statement.
According to government data, India’s auto industry accounts for 7.1% of gross domestic product and almost half of manufacturing GDP. The country is the fourth largest automobile producer in the world. Exports to the US account for 2% of India’s GDP.
Japanese car manufacturers maruti suzuki india and korea hyundai motor india It has a monopoly on the domestic car sales market, followed by local car majors. tata motors and Mahindra & Mahindra.
Passenger car sales in October rose 11% year-on-year to 557,000 units, while scooter and motorcycle sales rose 52% to 3.15 million units, driven by rural demand, the goods and services tax cut and festival rush.
Dealers reported “increased foot traffic, improved sentiment, and very high conversion,” FADA noted.
Rural buyers steer recovery
Personal and household spending now accounts for more than 60% of India’s GDP in FY2025, a level on par with developed countries such as the US and UK, and the country’s dependence on exports has declined.
Analysts say a recovery in domestic demand could offset the negative impact of high tariffs imposed by the United States on Indian goods since August.
In September, the Indian government announced wide-ranging GST cuts, including lowering taxes on light cars and two-wheelers from 28% to 18% to stimulate demand.
FADA data shows that rural demand stands out, with passenger car sales in small towns growing more than three times faster than urban centers, and two-wheeler sales almost doubling the growth in urban areas.
Two-wheeler and passenger car dealers expect strong demand to continue over the next three months, especially in rural India, a trade association for auto dealers said.
Cities where more than 40% of the male population is engaged in agriculture are considered rural areas by FADA.
