INDIA AUTO STORY 2025

From tax reforms to electrification, 2025 has been a landmark year so far that accelerated growth, innovation, and global attention in India's automobile industry

- Prashant Singh

The year 2025 marked a pivotal phase in India's automotive landscape, characterised by structural reforms, record-breaking sales, and a gradual but unmistakable shift towards electrification. A combination of government initiatives, changing consumer behaviour, and technological innovation reshaped the market, creating an environment that encouraged both traditional and new-age automakers to rethink strategies.

From small cars and two-wheelers to luxury SUVs and EVs, the Indian automobile sector witnessed a dynamic year that set the tone for the coming decade.

One of the defining developments of the year was the implementation of GST 2.0 reforms, which reshaped auto taxation, cutting GST on small cars from 28 per cent to 18 per cent, making them more accessible to first-time buyers in smaller cities. Larger cars over four metres and premium motorcycles above 350cc now face a 40 per cent tax. The changes lowered costs, simplified taxation, and created pricing predictability, allowing dealerships to offer attractive festival-season deals.

Auto retail grows 3.4 per cent in H1 FY'26:

India's auto retail sector grew 3.42 per cent in H1 FY'26, with 1.23 crore vehicle registrations from 1.19 crore last year. Most vehicle categories saw recovery, though growth remained moderate amid mixed economic signals.

Two-wheelers led the market with 88.37 lakh units, up 3.07 per cent, accounting for over 71per cent of sales, supported by rural demand, easier financing, and entry-level models. Passenger vehicles grew 3.67 per cent to 19.51 lakh units, driven by SUVs, crossovers, festive bookings, and expanding hybrid and electric options, contributing nearly 16 per cent of total registrations.