Race is On! India set to put 5 million cars on the road soon

New Delhi: Car sales in India are on track to cross the five million mark for the first time this fiscal year, becoming only the third country after China and the US to reach this milestone, said industry executives. The bullish forecast underlines sustained demand momentum across urban and rural markets, and it comes despite prolonged geopolitical headwinds, exacerbated by the US-Iran war, and higher oil prices.

Car sales grew 22% during April and August-the fastest pace in five years-to more than 2.05 million units, defying concerns that prevailing global uncertainties would dampen demand. Sales got a boost from the lingering effects of lower vehicle prices following a cut in goods and services tax rates with effect from September 22, 2025, and an expanding Indian economy.

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"There is positivity in the market despite geopolitical uncertainties," said Sai Giridhar, the newly anointed president of the Federation of Automobile Dealers Associations (Fada). "The best thing is not only urban but rural markets are supporting vehicle retails; growth is broad-based. With festive momentum kicking in, we should be crossing five million (in car sales) for first time this year."

VG Ramakrishnan, managing partner and domain lead (automotive) at consultancy firm Avanteum Advisors, said the GST cuts are helping drive the growth momentum. "Without it, the sales would have faltered," he said, adding that "whether we can now grow yearly sales to 15 million units and challenge the US is the real question."

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Maruti Suzuki, the country's top carmaker, is reassessing sales targets outlined previously in its long-term given the demand momentum. "Presently, we are estimating that the car industry would grow to 6.1 to 6.3 million by FY30-31 and that the share of the small car market would grow significantly faster than what had happened in the last five years," said chairman RC Bhargava. "This could lead to some (positive) changes in our longer-term targets."

The company is accelerating capacity expansions at its facilities in Haryana and Gujarat. Work has started on a new plant at Sanand, Gujarat, where the carmaker plans to invest ₹35,000 crore to build one million unit capacity. The new unit will enhance Maruti's total installed capacity to 2.9 million units by this fiscal year-end and 3.65 million units by the end of FY31.

The top four carmakers Maruti Suzuki India, Tata Motors, Mahindra & Mahindra and Hyundai Motor India have said they are looking at growing by at least 10% in the ongoing fiscal, surpassing 5-7% growth estimates arrived at the recent SIAM Looking Ahead Conclave.

"We are maintaining our 8-10% guidance, which means we have to grow at a minimum 8-10% in the second half also because we have grown by only 5.4% in Q1," Tarun Garg, MD and CEO at Hyundai Motor India said in a recent interview. He expects Hyundai, which has been underperforming its peers largely due to the lack of new models, will benefit from the upcoming launch of two all-new models in a high-growth segment. The start of a third shift at its Talegaon plant will bring incremental capacity.