Indian retail auto sales jump in December as tax cut fuels demand

India’s auto sales to customers jumped about 15% year-on-year in December, a dealers’ body said on Tuesday, as tax cuts, year-end offers and buying ahead of New Year price hikes boosted demand.

Total sales of passenger vehicles in the world’s third-largest auto market stood at nearly 2.03 million units, the Federation of Automobile Dealers Associations (FADA) said. Car sales jumped 26.6% and two-wheelers rose 9.5% last month.

In November, overall retail sales grew 2.1%. For the full year, overall sales were up 7.7% at 28.16 million units, FADA said.

In September, India cut the tax rate on sport utility vehicles with engine capacities of more than 1,500 cc to 40% from about 50% and on small cars and two-wheelers up to 350 cc to 18% from 28% to spur consumer spending and bolster growth amid steep U.S. tariffs.

The lower taxes are expected to drive demand in the final quarter of the financial year 2026, along with an upcoming harvest festival, weddings, and lower interest rates, FADA’s members said.

India’s top carmakers log December sales jump as tax cuts fuel demand

About 70.5% of the dealers surveyed by FADA expect retail sales to grow in January, while nearly 75% expect growth for the quarter to March 31.

Data published by carmakers on January 1 highlighted increased demand for small cars, with market leader Maruti Suzuki reporting a nearly 50% jump in sales of those models to dealers.

Hyundai India and smaller peers like JSW MG Motor India and Renault have raised prices of their models for January. Maruti, however, has said it will soon “take a call” on whether it wants to revise prices of small cars.

Meanwhile, passenger vehicle inventory, or the average time a vehicle stayed in a showroom, fell for a third consecutive month, to 37-39 days in December, from 44–46 days in November, FADA said.