GST rate cut, festive cheer leads to robust vehicle dispatches in Sept

New Delhi: Led by GST reforms and festive cheer, passenger vehicle and two-wheeler dispatches from factories to dealers surged in September, raising hopes for the industry to end the current fiscal on a positive note, industry body SIAM said on Wednesday.

The overall passenger vehicle dispatches last month rose 4 per cent to 3,72,458 units, as against 3,56,752 units in September 2024.

Similarly, two-wheeler sales witnessed a 7 per cent on-year rise to 21,60,889 units last month, as compared to 20,25,993 units in the year-ago period, according to data released by the Society of Indian Automobile Manufacturers (SIAM).

Total three-wheeler dispatches increased to 84,077 units last month, an increase of 5.5 per cent, as compared to 79,683 units in the same month of the previous year.

"In spite of the new GST rates coming into effect from September 22, i.e. only for 9 days of the month, passenger vehicles, two-wheelers and three-wheelers have already posted their highest-ever sales of September," SIAM President Shailesh Chandra told reporters here.

Looking ahead, the outlook for the sector remains encouraging due to key tailwinds, he added.

"The GST 2.0 reform is a landmark decision of the government, which, apart from catapulting the Indian auto industry to the next level, would bring in vibrancy in the entire economy, as this industry is closely intertwined with strong forward and backward linkages," Chandra stated.

In the July-September quarter, passenger vehicle sales stood at 10,39,200 units, a drop of 1.5 per cent, as compared to 10,55,137 units in the same quarter of the last fiscal.

Chandra noted that the first two months of the quarter witnessed de-growth and revival in sales was witnessed only in September aided by GST reduction, improved consumer sentiment, and the onset of the festive season.

The utility vehicle sub-segment continues to dominate the PV market, accounting for around two-thirds of total PV sales.

It, however, posted a de-growth of 2 per cent in the second quarter, as against the same period last fiscal.

Chandra noted that the SUV segment has risen to account for 56 per cent of the overall sales in the passenger vehicle segment, up from 29 per cent a few years ago, and might be in the process of stabilising.

Passenger car sales, however, remained relatively flat during the quarter.

Chandra also noted that the small car segment witnessed a revival with the GST rate cut, enabling a drop in prices.

Two-wheeler sales witnessed a growth of 7 per cent year-on-year to 55,62,077 units, as compared to the July-September quarter of the previous fiscal year.

This growth was supported by a combination of higher economic activity, improved affordability, resilient rural mobility demand, and the positive impact of the GST rate reduction implemented in late September, SIAM said.

Growth was led by the scooter segment which grew by 12 per cent in the quarter over the same period last year, as compared to growth in motorcycles segment which grew by 5 per cent over Q2 of last year.

Three-wheeler dispatches to dealers saw a growth of 10 per cent year-on-year to 2,29,239 units in September, SIAM said.

The three-wheelers segment saw its highest-ever Q2 sales in the September quarter.

The segment grew on the back of increased economic activity for meeting the transportation needs in urban and semi-urban areas and easier financing options and increased replacement sales has also been helping in supporting this growth momentum, SIAM noted.

Commercial vehicle sales rose to 2.4 lakh units in the July-September quarter, reflecting a year-on-year growth of 8 per cent as compared to the same period of 2024–25.

The growth was broad-based across segments, with medium and heavy commercial vehicles benefiting from strong freight demand, and light commercial vehicles showing improvement due to robust intra-city logistics requirements.

SIAM noted that the festive season has helped stimulate retail activity during the latter part of the second quarter.

The extended festive and wedding season is expected to sustain the growth momentum through Q3, reinforcing positive consumer sentiment across all vehicle categories, it added.

"The Indian automobile industry enters the second half of 2025-2026 with renewed cheer, supported by strong festive season momentum, stable macroeconomic conditions, and GST 2.0 reforms that have improved overall affordability and consumer sentiment," the industry body said.

While the industry remains watchful of geopolitical developments, the overall outlook for the rest of the current financial year remains encouraging, with the sector expected to close the fiscal year on a positive growth trajectory, it added.