India’s auto sales hit record high in FY26 as tax cuts and lower interest rates boost demand
- IBEF
- April 16, 2026
India’s automobile industry recorded its highest-ever annual sales across all major vehicle categories in FY 2025-26, supported by GST 2.0 reforms, multiple repo rate cuts and revised income tax slabs, which improved affordability and consumer sentiment. According to the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales rose 8% to 4.64 million units, while commercial vehicles increased 12.6% to 1.08 million units, three-wheelers grew 12.8% to 0.84 million units, and two-wheelers expanded 10.7% to 21.71 million units. The year also marked the first industry-wide sales record since FY19, highlighting the sector’s strong recovery from the pandemic-led demand slowdown. Vehicle exports across categories also surged 24% to 6.65 million units, strengthening India’s role as a global automotive manufacturing and export base.
The strong growth is strategically significant for India’s manufacturing economy as rising vehicle demand is expected to accelerate investments across auto components, EV systems, dealership networks, financing ecosystems and rural mobility markets. SIAM highlighted that the year closed on a high note despite a modest start, with positive sentiment driven by lower borrowing costs and tax relief measures. The momentum also reinforces India’s position as one of the world’s fastest-growing automobile markets, while supporting downstream growth in steel, tyres, batteries, electronics and logistics services. However, industry leaders are closely monitoring geopolitical risks and potential commodity price volatility arising from West Asia tensions.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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