Synopsis:
CLSA reported that during the first 16 days of the festive season, passenger vehicle volumes rose 25% YoY, two-wheelers 21%, while commercial vehicles, tractors, and three-wheelers recorded modest 5–7% growth.
India’s auto sector is witnessing strong festive season momentum, driven by improving consumer sentiment, GST cuts, and pent-up demand, leading to robust growth in passenger and two-wheeler sales at the retail level.
Festive Season Boosts Auto Sales
According to brokerage firm CLSA, India’s automobile sector is witnessing strong momentum during the festive season, supported by improving consumer sentiment, a GST rate cut, and pent-up demand. The festive spirit is visibly lifting sales across categories, leading to robust growth at the retail level.
Pent-up demand refers to a scenario where consumer demand for goods or services surges unusually high after a period of reduced spending, typically occurring following an economic slowdown, recession, or restrictions such as a lockdown.
Passenger Vehicles and Two-Wheelers Lead Growth
During the first 16 days of the ongoing festive season, vehicle sales have shown a sharp uptrend. Passenger vehicle volumes rose 25% year-on-year (YoY), reflecting strong buyer interest and availability of new model launches. Similarly, two-wheeler sales increased 21% YoY, driven by rising rural demand and improved affordability.
Moderate Growth in Commercial Vehicles, Tractors, and Three-Wheelers
In contrast, commercial vehicles and tractors recorded modest growth of around 5% each, indicating a steady but cautious recovery in the broader logistics and agricultural segments. Three-wheeler sales grew 7%, supported by improving urban mobility and increased demand for last-mile transport solutions.
Overall, CLSA’s analysis highlights a positive outlook for the auto sector, with festive buying trends, government tax relief, and improving consumer confidence likely to sustain momentum through the rest of the season.
As of September 2025, GST on vehicles in India has been revised: two-wheelers up to 350cc and small cars (petrol/LPG ≤1200cc, diesel ≤1500cc) are now taxed at 18%, while two-wheelers above 350cc and larger/luxury cars are taxed at 40%. Electric vehicles benefit from a lower 5% GST, which stands unchanged, making them more affordable.
Written by Manideep Appana
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