The Indian automotive market experienced a dramatic surge in the final days of September 2025, with sales spiking by roughly a third. This remarkable rebound was driven by buyers who strategically timed their purchases to capitalize on the newly implemented GST rates, which took effect on September 22, 2025, the first day of the auspicious Navratri festival.
Data compiled by the Federation of Automobile Dealers Associations (FADA) highlights the extent of the rush:
- Two-Wheeler Sales: Retail sales, tracked via vehicle registrations on the VAHAN portal, surged 34.95% year-on-year to 8,35,364 units during the 10-day Navratri period (September 22 to October 2).
- Car Sales: Sales of passenger vehicles during the same time frame also witnessed a significant increase, rising 34.87% to 2,17,744 units.
The Impact of GST Rationalization
The massive spike in sales was a direct reaction to the government’s announcement on September 4 to rationalize the Goods and Services Tax (GST) structure. This move consolidated the previous four-slab system (5%, 12%, 18%, and 28%) into just two main slabs: 5% and 18%. Crucially, the reform also eliminated the compensation cess.
The new structure introduced a major change for the auto industry:
- Small cars are now subject to a GST rate of 18%.
- Larger cars are taxed at 40%.
- A new 40% slab was introduced for non-essential “sin goods.”
Sentiment Lift and Festive Outlook
The decision to launch the new rates on September 22, coinciding with the beginning of Navratri—a period traditionally considered propitious for making new purchases—was seen as a brilliant policy move.
“The reduction in GST rates—coupled with festive demand—led to renewed inquiries and bookings,” said FADA Vice President Sai Giridhar. He noted that the sales success was a potent reminder of “what the right policy at the right time can do for a nation’s sentiment.” He added, however, that the total potential of the rebound was slightly limited by the fewer billing days available.
Overall, for the full month of September, the auto sector showed modest growth compared to the previous year: two-wheeler sales rose by 6.51% to 12,87,735 units, while car sales saw a 5.80% increase to 2,99,369 units.
Dealers are optimistic that the momentum built in September will carry forward. They used the period to replenish their inventory and are now well-stocked with cars to meet the strong demand expected during the major festival period of Dhanteras and Diwali (October 20-21).
Giridhar concluded by stating the festive outlook remains promising: “The momentum built in the closing days of September will carry forward into Diwali, marking a promising end to the 42-day festive period. If the logistics and transport ecosystem performs seamlessly, this could very well be the best festive season India has ever experienced.”