The Indian automobile industry has closed the 2025 calendar year with an unprecedented flourish, reporting its strongest monthly growth of the year in December. According to the latest data released by the Society of Indian Automobile Manufacturers (SIAM) on January 13, 2026, passenger vehicle (PV) dispatches from manufacturers to dealers jumped by 26.8% year-on-year. Total PV sales for the month reached 399,216 units, a significant leap from the 314,934 units recorded in December 2024, signaling a robust recovery and a wave of fresh consumer optimism across the country.

Industry experts and SIAM officials attribute this historic surge to a "perfect storm" of supportive government policies and macroeconomic shifts implemented in the latter half of 2025. A primary catalyst was the GST 2.0 reform introduced in September, which slashed tax rates on small cars from 28% to 18% and reduced the levy on large SUVs from 50% to 40%. This aggressive tax rationalization, combined with three successive repo rate cuts by the Reserve Bank of India (RBI) throughout 2025, has dramatically lowered the cost of ownership and financing, making new vehicles more accessible to the middle class.

The utility vehicle (UV) segment continues to be the primary engine of growth, accounting for nearly 65% of all passenger vehicles sold in December. The shift in consumer preference toward feature-rich, larger models remained unshakable, with utility vehicles recording a 20.9% increase during the October–December quarter. However, December also saw a surprise partial rebound for entry-level hatchbacks. This "second wind" for small cars is being linked directly to the GST cuts, which provided much-needed price relief to the price-sensitive mass-market segment that had been struggling for the last two years.

Among the top performers, Maruti Suzuki maintained its undisputed dominance, dispatching 178,646 units in December—a massive 37% increase compared to the previous year. Mahindra & Mahindra reclaimed the second spot from Tata Motors by a narrow margin, selling 50,946 units driven by the sustained demand for the Scorpio-N, XUV700, and the newly launched XUV 3XO. Meanwhile, Tata Motors solidified its third-place standing with 50,046 units, bolstered by strong interest in its "New Forever" range and an early booking surge for the upcoming Tata Sierra.

The growth was not limited to the four-wheeler market; the two-wheeler segment recorded an even more staggering jump of 39.4% in December, with 1.54 million units reaching dealerships. This recovery is a vital sign of health for the rural economy, which has benefited from a favorable monsoon and improved income sentiment. Scooters led the pack with a 42.1% surge, while motorcycles followed closely, indicating that both urban and semi-urban demand are firing on all cylinders as the industry enters 2026.

Beyond domestic borders, India’s status as a global manufacturing hub reached new heights in 2025. Annual passenger vehicle exports grew by 16%, totaling 8.63 lakh units for the year. This export momentum, coupled with the domestic record of 4.49 million units sold in a single calendar year, has prompted major brokerages like Nomura to upgrade their growth forecasts for the 2026 fiscal year. The industry is now preparing for a major influx of new technology, including highly anticipated plug-in hybrids like the JSW Motors SUV and a fresh wave of affordable EVs.

As the industry looks toward the Union Budget 2026, the record-breaking December data has strengthened the auto sector's plea for long-term tax stability. SIAM President Shailesh Chandra noted that while the industry remains "watchful of geopolitical developments" that could affect supply chains, the foundation for 2026 is exceptionally strong. With inventory levels at dealerships currently at their lowest in months and a healthy pipeline of pending bookings, the Indian automotive story is moving into the new year with more momentum than ever before.