Rural buyers outpace cities as India’s passenger vehicle sales surge 26.6% in December: FADA

India’s passenger vehicle (PV) retail sales jumped sharply in December 2025, led by faster growth in rural markets that outpaced urban demand, according to data released by the Federation of Automobile Dealers Associations (FADA) on Tuesday.

PV retail sales rose 26.64 per cent year-on-year to 3,79,671 units in December, with rural PV demand growing 32.40 per cent YoY, compared with 22.93 per cent growth in urban markets, highlighting the widening spread of personal mobility beyond major cities, FADA said.

The strong rural performance capped a year in which overall PV retail sales rose 9.70 per cent in calendar year 2025 to 44,75,309 units, with rural markets again outperforming urban centres. For the full year, rural PV sales grew 12.31 per cent, compared with 8.08 per cent growth in urban areas, underscoring the sector’s increasing dependence on non-metro demand.


"India’s auto retail delivered a confident close, with total retails at 2,81,61,228 units, registering a 7.71% YoY growth. The year, however, was a tale of two halves—Jan to Aug remained subdued despite supportive macro cues such as directtax relief in the Union Budget and RBI’s cumulative rate easing through 2025 . During this phase, customers stayed value-conscious and financier approvals remained selective in pockets, resulting in uneven conversions across markets," said FADA President C S Vigneshwar.

Overall auto retail sales across categories closed CY’25 at 2,81,61,228 units, up 7.71 per cent year-on-year, supported by a clear rebound in the second half of the year after a muted January–August period. FADA described 2025 as a “two-half year”, noting that demand strengthened from September onwards after GST 2.0 improved affordability and lifted consumer sentiment.

December delivered a strong year-end finish for the industry, with total auto retail sales rising 14.63 per cent YoY to 20,28,821 units. Alongside PVs, growth was also seen in commercial vehicles (up 24.60 per cent), three-wheelers (up 36.10 per cent), two-wheelers (up 9.50 per cent) and tractors (up 15.80 per cent), while construction equipment sales fell 18.54 per cent.

"The turning point came from September onwards, when the landmark GST 2.0 rate rationalisation—including meaningful reductions for mass segments like small cars, two-wheelers (up to 350cc), three-wheelers and key commercial categories—improved affordability and lifted sentiment, leading to a clear upshift through Sept–Dec," Vigneshwar was quoted as saying.

FADA said inventory levels in the PV segment moderated in December to around 37–39 days, down by about seven days from the previous month, indicating healthier channel balance.

The data also showed the continued strengthening of the transition towards alternative fuels. In calendar year 2025, CNG vehicles accounted for 21.30 per cent of PV sales, while electric vehicles made up 3.95 per cent. In December alone, PV CNG penetration remained near 21 per cent, with EV share at around 4 per cent.

"CY’25 also reinforced the transition underway—EV share moved up in 2W, PV, CV and remained dominant in 3W, while CNG strengthened its presence in PV and CV, signalling a more diversified mobility mix. Overall, CY’25 closes on a celebratory note—stronger demand visibility, healthier enquiry pipelines and a more confident consumer, as we step into 2026," FADA's Vigneshwar added.

Looking ahead, dealer sentiment remains constructive, FADA said. For January 2026, 70.48 per cent of dealers expect growth, with momentum likely to build after Sankranti and Pongal and into the marriage season.

For the January–March quarter, 74.91 per cent expect growth, supported by festive demand, year-end buying and sustained rural traction, FADA said, while flagging financing turnaround times and availability of in-demand models as key watch-outs.