ICICI Securities: GST Rate Cut Sparks Strong Recovery in Indian Auto Sector

In September 2025, the Indian automobile market showed a strong recovery. This happened because the government reduced the GST rates, and people started buying vehicles early for the festive season. According to ICICI Securities, the number of vehicles sent from factories to dealers increased in all major categories. This was one of the best months of the year and helped bring back positive energy after a slow period.

Both urban and rural buyers responded positively to the price relief, which helped passenger vehicle (PV) makers and two-wheeler brands to become the biggest gainers.

Two-wheelers lead the charge

Hero MotoCorp resumed its positive growth with 8% increase in sales, reaching approx. 6.87 lakh units. This growth was mainly due to solid sales of scooters, showing a recovery in demand from urban areas. However, TVS Motor also saw good growth, up 12% with 5.41 lakh units sold, increased by strong interest in its iQube electric scooter, which contributed over 31,000 units.

Bajaj Auto saw a 9% increase in total sales, helped by a 15% increase in exports of three–wheelers.

However, the standout performer was Royal Enfield, which experienced an impressive 43% increase in sales, crossing 1.24 lakh units. This shows that the demand for mid-size motorcycles is still growing fast.

Commercial and farm segments keep pace

The commercial vehicle (CV) segment continued to grow steadily. Tata Motors’ CV sales went up by 19%, reaching 36,000 units, thanks to both heavy and light trucks. Ashok Leyland saw a 9% increase, and Mahindra & Mahindra’s light CV sales rose by 18%.

However, the real surprise came from the tractor segment, the traditional barometer of rural demand. Mahindra and Mahindra sold 66,000 units and Escorts 18,000 together, marking a 49% year-on-year surge. Strong monsoon coverage and better farm incomes helped sentiment, pushing tractors to the top of the growth chart.

A festive tailwind for the months ahead

ICICI Securities noted that the broad-based growth indicates “a healthy demand rally led by festive buying and the GST rate cut.” As the festive season picks up, car manufacturers are preparing for a busy October, expecting strong sales. This signals that India’s automotive market is gaining momentum again, driven by increased consumer confidence.

Passenger vehicles find their rhythm

Maruti Suzuki’s sales increased by 3%, reaching 1.9 lakh units. However, it faced some delays due to logistics issues. However, its exports grew by 52%. Tata Motors had a great performance, with sales jumping 47% to 6,100 units, thanks to a big increase in electric vehicle sales. Mahindra & Mahindra grew by 10%, and Hyundai Motor India also saw a 10% rise, helped by a 44% boost in exports.