New Delhi, January 9. The Indian automobile industry experienced a significant growth of 20 percent in volumes during the October-December quarter. This surge is attributed to improvements in the Goods and Services Tax (GST), a revival in rural demand, and the festive season, as reported on Friday.
A report by financial services firm PL Capital indicates that enhanced affordability, easier financing options, and improved customer sentiment have contributed to increased demand for passenger vehicles, two-wheelers, and commercial vehicles.
Due to the robust sales during the third quarter, inventory levels for passenger vehicles decreased to 45 days in November and further to 38 days in December, down from 55 days previously.
The report highlights that small cars benefitted significantly from GST reductions, while SUV sales have remained consistently strong.
There has also been a notable uptick in two-wheeler sales, particularly in the segment of 150cc and above, leading to extended waiting periods for some models.
According to the report, the third quarter of the fiscal year 2026 has shown early signs of growth in commercial vehicles, supported by a revival in construction and mining activities following an extended monsoon season. Medium and heavy commercial vehicles outperformed light commercial vehicles due to increased replacement demand and a preference for vehicles with higher capacity.
The report further mentions that the rationalization of GST rates has improved affordability, encouraging fleet operators to expedite their purchasing decisions.
Sales of construction equipment have improved, although growth has been slower due to the high base set by purchases made prior to last year’s emissions standards changes. The continuous rise in tractor sales is attributed to government subsidies and supportive governmental policies.
“On the rural front, good kharif crop yields and better rabi sowing have strengthened farmers’ income and cash flow, resulting in increased demand for entry-level vehicles and tractors,” the report states.