India’s auto industry posted its strongest month on record in October, underscoring a sharp rebound in domestic consumption that could offset the impact of the slowdown in exports to the U.S.
Total retail sales across all vehicle segments — from cars to tractors — were up 40.5% from a year earlier, data from the Federation of Automobile Dealers Associations showed.
“Both passenger vehicles and two-wheelers achieved lifetime highs, signaling renewed consumer confidence and strong economic undercurrents,” said C.S. Vigneshwar, President of the trade body, in the release.
India’s automotive industry contributes 7.1% to the nation’s gross domestic product and nearly half of manufacturing GDP, according to government data. The country is the fourth-largest automobile producer globally. Exports to the U.S. account for 2% of India’s GDP.
Japanese carmaker Maruti Suzuki India and South Korea’s Hyundai Motor India dominate the domestic car sales market, followed by local auto majors like Tata Motors and Mahindra & Mahindra.
Passenger vehicle sales grew 11% year on year to 557,000 units in October, while sales of scooters and motorcycles surged 52% to 3.15 million, driven by rural demand, goods and services tax reductions, and the festive rush.
Dealers reported “stronger footfalls and better sentiment leading to extremely high conversion,” FADA noted.
Rural buyers steer recovery
Private and household spending now accounts for more than 60% of India’s GDP in fiscal year 2025 — a level comparable to developed economies such as the United States and the United Kingdom — reducing the country’s reliance on exports.
The rebound in domestic demand could help offset the negative impact of the steep U.S. tariffs on Indian goods imposed since August, analysts say.
In September, the Indian government announced widespread GST cuts to spur demand, including lowering taxes on small cars and two-wheelers to 18% from 28%.
According to FADA data, rural demand stood out: sales of passenger vehicles in smaller towns grew over three times faster than in urban centers, while two-wheeler sales nearly doubled urban growth.
Dealers of two-wheelers and cars, especially in rural India, expect strong demand to continue over the next three months, said the trade body of automobile dealers.
Any city with more than 40% of its male population working in agriculture is considered a rural area by FADA.
Source: CNBC