Passenger vehicle dispatches up 20.6% in Q3 on strong UV demand

SIAM data show PV wholesales rose 20.6 per cent year-on-year in Oct-Dec 2025 to a record 1.28 million units, while calendar-year dispatches and exports also hit new highs

India’s passenger vehicle (PV) industry has achieved a rare feat — witnessing the strongest-ever performance in calendar year 2025 as well as Q3FY26. This was owing to a decisive recovery in consumer demand aided by policy support, improved affordability and festival-led buying momentum.

 

According to data released by the Society of Indian Automobile Manufacturers (Siam), PV domestic wholesales in October–December 2025 rose to an all-time high of 1.27 million units, a 20.6 per cent growth over the same quarter last year.

 

This made Q3 the highest-selling quarter for the segment, driven by strong traction across utility vehicles (UVs), passenger cars and vans during the festival season.

   

PVs comprise passenger cars, vans as well as UVs.

 

The robust third-quarter performance also lifted calendar-year volumes to a new peak.

 

PV dispatches during January–December 2025 stood at 4.49 million units, up 5 per cent year-on-year (Y-o-Y), with Q3 accounting for a disproportionately large share of the annual off-take.

 

Commenting on the calendar year 2025 performance, Siam president Shailesh Chandra said the year turned out to be a “landmark year for the Indian automobile industry,” despite a subdued first half and ongoing supply-side challenges.

 

He added that a series of structural policy measures — including income tax relief, successive repo rate cuts and the rollout of goods and services tax (GST) 2.0 — helped create a favourable demand environment.

 

“The reduction of GST rates made vehicles more affordable and injected fresh momentum into the sector,” Chandra said, adding that growth during the year was broad-based across segments. Passenger vehicles grew 5 per cent to around 4.5 million units, commercial vehicles rose 7.7 per cent to 1 million units, and three-wheelers increased 8.2 per cent to 788,000 units, while two-wheeler sales crossed the 20-million mark for the second time at 20.50 million units, growing 4.9 per cent Y-o-Y.

 

Meanwhile, Siam director general Rajesh Menon said all vehicle segments posted their “highest ever sales of Q3,” supported by double-digit growth across categories.

 

UVs continued to be the primary growth engine, while passenger cars also saw a sharp revival on improved financing conditions.

 

A closer look at the passenger vehicle mix shows that UVs continued to be the primary growth driver during the quarter as well as over the calendar year.

 

UV sales in Q3 of FY26 rose 20.9 per cent Y-o-Y to 852,498 units, marginally outpacing the growth in passenger cars.

 

Passenger cars, meanwhile, recorded a 20.5 per cent growth in Q3 to 381,226 units, supported by improved affordability following goods and services tax (GST) rate cuts and lower financing costs.

 

Passenger cars accounted for almost a third of the October-December PV sales. 

 

However, on a calendar-year basis, passenger car volumes remained largely flat, growing just 0.6 per cent during January–December 2025. This underscores the structural shift in buyer preference towards UVs.

 

In contrast, UV sales grew 7.4 per cent over the same period, reinforcing their role as the growth backbone of the PV segment even beyond the festival quarter.

 

For the calendar year, UVs accounted for 65 per cent of overall PV sales (see chart).

 

Industry executives attributed the surge to a confluence of demand-side enablers. Improved affordability following the GST rate reduction, benefits from personal income tax relief, and successive repo rate cuts by the Reserve Bank of India (RBI) helped lower financing costs and revive discretionary spending. This was further supported by a renewed sense of consumer optimism during the festival quarter.

 

Exports added another layer of strength to the PV story. Passenger vehicle exports during Q3 of FY26 touched a record 225,046 units, registering a 11.7 per cent growth over the year-ago period.

 

For the full calendar year, exports climbed to an all-time high of 863,000 units, up 16 per cent compared to 2024.

 

Demand remained steady across key overseas markets, including the Middle East, Africa and Latin America. Indian original equipment manufacturers (OEMs) had been benefiting from a diversified export portfolio and competitive cost structures.

 

Beyond passenger vehicles, other automotive segments also reported healthy growth in the quarter. Two-wheeler domestic sales during October–December 2025 rose to 5.69 million units, up 16.9 per cent Y-o-Y, driven by strong scooter demand and a gradual recovery in entry-level motorcycles. 

 

In the two-wheeler segment, the growth divergence between scooters and motorcycles became more pronounced in Q3. Motorcycle sales during October–December 2025 rose 12 per cent Y-o-Y to 3.39 million units, reflecting a gradual recovery in mass-market demand, aided by improved rural cash flows and easing price pressures.

 

However, motorcycles lagged scooters in growth, highlighting the still-measured revival in entry-level commuting demand.

 

On a calendar-year basis, motorcycle sales grew just 1.1 per cent in January–December 2025 to 12.48 million units, indicating that while volumes have stabilised, a strong cyclical upswing is yet to fully materialise.

 

This contrasts with scooters, which posted double-digit growth both in Q3 and over the full year, driven largely by urban demand, increasing female participation, and higher acceptance of premium and feature-rich models.

 

Data suggests that while policy support and easing financial conditions have lifted overall two-wheeler demand, urban-led consumption is recovering faster than rural-centric motorcycle demand. Industry executives expect motorcycles to see a more meaningful rebound in the coming quarters as the full impact of income tax relief, repo rate cuts and improving agricultural incomes flows through.

 

The three-wheeler segment also delivered a solid performance, aided by rising passenger carrier demand and improving last-mile mobility activity.

 

Domestic three-wheeler sales in Q3 FY26 increased 14 per cent year-on-year to 215,211 units, while exports surged sharply, reflecting renewed demand from overseas markets. Passenger carrier three-wheelers remained the largest contributor to growth during the quarter.

 

Commercial vehicles, too, reported double-digit growth in Q3, supported by infrastructure activity, mining demand and improving freight availability, although the pace of growth was more measured compared to PVs and two-wheelers.

 

Looking ahead, the industry expects momentum to remain healthy in Q4 (January–March 2026), traditionally a strong period due to year-end purchases, replacement demand and continued infrastructure spending.

 

OEMs are also likely to push retail schemes to close the financial year on a strong note.

 

For FY26, the Indian automobile industry is expected to post broad-based growth, led by passenger vehicles and two-wheelers. Exports are projected to remain a key growth driver amid steady demand from emerging markets.

 

However, industry stakeholders continue to monitor risks related to commodity prices, global economic volatility and supply chain disruptions.

 

Overall, the record-breaking performance in Q3 underscores the structural strength of India’s auto market, with passenger vehicles firmly leading the recovery cycle.