3 days ago
India’s Auto Sales Surge Despite Higher Prices and Petrol Costs
People in India are buying many more vehicles even though cars and petrol have become more expensive.
A GST cut in 2025 helped reduce prices at first.
Income-tax relief also left some workers with more money to spend.
Lower interest rates made vehicle loans cheaper.
These changes helped passenger-car sales grow strongly.
Electric-car sales grew especially quickly as petrol prices rose.
Two-wheeler sales also increased, although more slowly than earlier in the year.
Some people worry that a weak monsoon could reduce rural spending.
Experts say vehicle demand may stay strong because rural incomes come from more than farming alone.
Passenger vehicle sales rose 16.8% year-on-year in January-March and nearly 23% in April-June.
The 2025 GST cuts, income-tax relief and cheaper auto loans have supported vehicle demand.
Dealer inventory fell to 28 days by end-March, compared with 52-53 days a year earlier.
Electric passenger-vehicle registrations increased 81.6% year-on-year to 151,050 units during January-June.
Two-wheeler sales grew 14% in April-June, while experts expect passenger-vehicle sales to remain strong despite monsoon concerns.
- Who
- Indian vehicle buyers, automakers, dealers, policymakers and consumers of passenger vehicles and two-wheelers.
- What
- Vehicle sales have continued to rise despite higher car prices and a Rs 7.50-per-litre petrol-price increase.
- Where
- India.
- When
- The trend covers roughly the past nine months, with figures reported for January-June and the April-June quarter after GST cuts introduced in 2025.
- Why
- GST cuts, income-tax relief, lower auto-loan costs, hiring growth and rising electric-vehicle demand have supported purchases.
Demand Remains Strong
Risks Could Slow Growth
Policy and affordability
Demand Remains Strong
GST cuts, tax relief, lower borrowing costs and surplus liquidity have supported consumption and vehicle purchases.
Risks Could Slow Growth
Vehicle prices have risen as manufacturers passed on higher input costs, while petrol prices increased by Rs 7.50 per litre.
Rural demand
Demand Remains Strong
Hemal Thakkar of Crisil Intelligence said rural sentiment is holding up and expects passenger-vehicle sales to grow in double digits this fiscal.
Risks Could Slow Growth
A deficient or slow-progressing monsoon could threaten rural consumption, although economists cited in the article expect agricultural income growth to remain positive.
Electric-vehicle momentum
Demand Remains Strong
Rising petrol prices appear to be encouraging electric-car adoption, with registrations up 81.6% year-on-year in January-June.
Risks Could Slow Growth
The article identifies higher vehicle prices and fuel costs as continuing affordability pressures, even as EV demand grows.
Key facts
- Passenger-vehicle growth
- Sales rose 16.8% year-on-year in January-March and nearly 23% in April-June.
- Dealer inventory
- Inventory fell to 28 days by end-March, versus 52-53 days a year earlier.
- Interest rates
- The policy rate declined by 125 basis points, from 6.5% in December 2024 to 5.25% in December 2025.
- Income-tax relief
- Salaried incomes below Rs 12.75 lakh a year became tax-free under the cited tax changes.
- Electric passenger vehicles
- Registrations rose 81.6% year-on-year to 151,050 units in January-June.
- EV penetration
- Electric passenger vehicles reached 10.6% penetration in June, when monthly sales reached 33,524 units.
- Two-wheelers
- Sales increased 14% year-on-year in April-June, following 25% growth in January-March.
Quotes
A senior corporate executive
A senior corporate executive commenting on policy support for consumption
“Recall the 125 basis points repo rate cut, liquidity turning to surplus and the GST tax rate cuts of 2025 — they have helped support consumption.”
financialexpress.com
Hemal Thakkar
Senior director and senior practice leader at Crisil Intelligence
“Despite the relatively slow progress of the monsoon, the rural sentiment is holding up.”
financialexpress.com
Sources
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