“Though FY 2025-26 started modestly, the Indian auto industry has closed the year on a high note with every vehicle category viz. passenger vehicles, commercial vehicles, three-wheelers and two-wheelers, together posting their highest ever sales in a financial year, after seven years. The strong contributors to this growth have been the positive sentiments created through GST 2.0 reforms and multiple Repo Rate cuts during the year,” Shailesh Chandra, President, SIAM, said, in a statement.
However, uncertainties arising from the West Asia conflict, particularly prices of crude oil and commodities, higher exchange rates and disruptions in shipping routes, remain a concern for the auto sector. Stable geopolitical environment will help build confidence of the industry, which can, in turn, drive further growth of the auto industry’s performance in 2026-27, according to the apex industry body Society of Indian Automobile Manufacturers (SIAM).
Passenger vehicles
Passenger vehicle segment posted its highest ever sales of 13.16 Lakh units in fourth quarter of 2025-26, up 13.2 per cent when compared to the same period last year. The segment also clocked its highest ever sales of 46.43 Lakh units in FY2025-26, posting a growth of 7.9 per cent, as compared to previous financial year.
“This robust performance was supported by improved affordability following the GST rate reduction, enhanced purchasing power from personal income tax relief and lower financing costs due to successive repo rate cuts by Reserve Bank of India,” SIAM said.
“Therefore, the second half of 2025-26 posted a robust growth of 16.7 per cent compared to 2024-25. This came after a de-growth of 1.4 per cent in first half of 2025-2026, when compared to the same period last year,” it added.
Further, increase in registration of electric passenger vehicles by more than 80 per cent in FY 2025-26 compared to previous years also propelled this growth, SIAM said.
Passenger vehicles also saw their highest ever exports of 9.05 lakh units in 2025-26, registering a growth of 17.5 per cent over FY 2024-25. The demand has been steady across most markets, including in the Middle East, Africa and Latin America, last year, the industry body noted.
Two-wheelers
In the fourth quarter of 2025-2026, two-wheelers posted their highest ever sales of 57.73 lakh units, with a growth of 26.4 per cent, as compared to the same period last year.
For FY 2025-26 period, the two-wheeler segment posted the highest ever sales of 2.17 crore units, with a growth of 10.7 per cent when compared to previous year and crossing the previous peak achieved in FY2018-19.
The implementation of GST 2.0 has spurred growth in both third and fourth quarter of 2025-26. While the first-half growth was flat at sub 1 per cent, the second-half posted growth of about 21.5 per cent compared to previous year. In addition, EV offtake also increased in March, driven by anticipation of rising fuel prices, SIAM said.
Complementing these structural reforms, supportive macroeconomic measures, including multiple repo-rate reductions and income tax relief in FY2025-26, provided the necessary impetus, further strengthening consumer demand, it added.
While growth had been observed across both urban and rural markets, the current trend had been led primarily by urban demand, SIAM said.
Two-wheelers also recorded their highest ever exports in a financial year with 51.8 lakh units in 2025-26 with a growth of 23.4 per cent from 2024-25. Wider product range and recognition of Indian two-wheeler brands and its robust quality are increasing acceptance globally. Further, the depreciated value of rupee is also helping the exports volumes, it added.
Three-wheelers
Three-wheelers posted their highest ever fourth-quarter sales of 2.27 Lakh units in FY2025-2026, with a growth of 26.7 per cent from the comparable period last year.
Three-wheelers also posted their highest ever sales in FY 2025-26 of 8.36 lakh units, registering a growth of 12.8 per cent, as compared to FY 2024-25.
Performance of the three-wheeler segment was driven by increased economic activity, rising movement of people and goods, strengthening personal and commercial mobility needs for meeting the transportation needs in urban and semi urban areas, SIAM said.
Demand had been further aided by the expansion of electric autorickshaws. In addition, the issuance of new permits for ICE three-wheelers by select State governments had also contributed positively to overall growth, it added.
Exports of three-wheelers grew by 50.1 per cent in FY 2025-26 compared to last year, with exports of around 4.61 lakh units. Increased exports to Sri Lanka and African nations had contributed to this growth, SIAM said.
Commercial vehicles
Commercial vehicle segment recorded its highest ever sales of 3.25 lakh units in the fourth quarter of FY2025-2026, resulting in a growth of 18.9 per cent, compared to same period last year.
Commercial vehicle segment also posted its highest ever sales in FY 2025-26 with 10.80 lakh units, with a growth of 12.6 per cent from last year.
The rollout of GST 2.0 reforms had provided a strong impetus to domestic commercial vehicle sales, with consumption demand driving new vehicle purchases by fleet operators. Additionally, the RBI’s repo-rate cuts had also significantly lowered the total cost of ownership, easing financing for consumers and strengthening overall market sentiment. Increased capital expenditure had further spurred economic activity in the country, providing a boost to the commercial vehicle segment, SIAM said.
Around 0.95 lakh units of commercial vehicles were exported in FY 2025-26 with a growth of 17.4 per cent over 2024-25. Neighbouring countries and the Middle East had been the steady markets for commercial vehicles, it added.
Outlook
FY 2025-26 had been a landmark year for the Indian automobile industry, supported by a series of structural policy reforms that had strengthened demand fundamentals and significantly boosted consumer confidence. Therefore, the industry was optimistic and expecting growth to continue in all the vehiclecCategories in 2026-27, continuing strong domestic momentum from the latter half 2025-26, SIAM said.
“Looking ahead, domestic demand and macroeconomic fundamentals remain robust as we step into FY 2026-27, which should aid steady growth for the industry. However, uncertainties arising from the West Asia conflict need to be closely monitored, as it may have impacts on production, commodity prices, fuel prices, freight rates and the overall economy,” Chandra said.
Production
In the fourth quarter of 2025-2026 the overall production of passenger vehicles, commercial vehicles, three-wheelers, two-wheelers and quadricycle stood at 93,36,821 units. In FY 2025-2026, the production was 3,47,08,984 units.