The year 2025 emerges as a landmark for India’s passenger vehicle (PV) market. Reeling from a slowdown in sales growth in the first half of the year, the sector received a Diwali gift from the GST Council, which slashed taxes on four- and two-wheelers in late September, triggering a price cut by automakers. Following this, demand surged with October retail sales shattering records by clocking 40% growth. Experts say inflation-hit fence-sitters rushed in to clear inventories following the price cuts.
The year will also be remembered for the arrival of Tesla in the Indian market and the rapid penetration of electric cars, thanks to an aggressive push by Tata Motors, Mahindra & Mahindra and JSW MG Motor India. Sports Utility Vehicles (SUVs) again dominated the demand landscape and following the GST rate cut and multiple new launches, their sales are only expected to go up. Overall, car sales are likely to end the year with a record retail figure of 4.6 million units, up 10.5% from 4.12 million units in 2024.
EVs gain ground
Electric vehicle (EV) sales are shifting gears, with their share in PV sales doubling in the first half of FY26. EVs now account for about 5% of all PVs sold, compared to 2.6% at the end of FY25. According to data from the Federation of Automobile Dealers Associations (FADA), electric car sales grew 108% year-on-year to 91,726 units in the first six months of FY26, up from 44,172 units in the same period last year. Industry data also shows that EV sales stood at 160,740 units between January and November 2025, significantly higher than the entire 2024 sales of 99,694 units.
Amid intensifying competition, homegrown auto major Tata Motors retained its top position in the EV space and has a current market share of less than 40%. JSW MG Motor India’s market share expanded to nearly 30%, thanks to excellent demand for the Windsor EV. Mahindra & Mahindra’s two electric-origin SUVs - BE 6 and XEV 9e - were among the most sold EVs of 2025 and helped the SUV major grab a market share of 19%, up from 7% share it had a year ago.
After years of playing hide-and-seek, the American electric carmaker Tesla launched its first showroom in Mumbai on July 15 and expanded its presence in Delhi NCR. The year also saw the entry of Vietnamese electric carmaker VinFast in India.
SUVs dominate PV market
SUVs again dominated India’s automobile market in 2025, with almost all the new launches happening in this segment. From ICE to EVs, automakers targeted this segment and with the price cuts post-GST revision, demand for bigger and bulkier cars only got stronger. Utility vehicles’ share in the Indian PV market has hit all-time highs, reaching around 64-65% of total PV sales in FY25, a massive jump from just over 20% a decade ago. Within the utility vehicle (UV) segment, the share of the pure-play SUV segment now stands at almost 55%, higher than any other segment.
For many carmakers, SUVs dominate their product lineups. In the past few months, top players such as Maruti Suzuki, Tata Motors, M&M, Hyundai and Kia have flooded the market with new SUVs. Going forward, the segment will continue to see new launches.
Experts believe that carmakers are prioritising SUV launches because the segment continues to dominate both consumer preference and market performance. What has also added to the numbers is that many first-time buyers are shifting from hatchbacks to compact SUVs, thus bringing in more volume.
Indian carmakers emerge stronger
When calendar year 2025 began, Korean automaker Hyundai held a comfortable lead over Tata Motors and Mahindra & Mahindra for second place in India’s PV market. As the year draws to a close, the two Indian carmakers have surged ahead of Hyundai in sales rankings, strengthening their domestic presence. Tata Motors’ domestic PV sales reached 57,436 units in November 2025, up 22% from 47,063 units a year earlier. SUV leader Mahindra & Mahindra sold 56,336 vehicles domestically, also posting 22% growth. Hyundai Motor India Ltd (HMIL) managed just 4.35% growth, at 50,340 units.
Tata Motors struggled with sluggish sales growth for much of 2025 but saw a sharp pickup in recent months, fueled by new launches and price cuts after the GST reduction. With the new Sierra clocking 70,000 bookings on day one, Tata is poised to stay among the PV market’s top three. Mahindra remains the only major player sustaining double-digit sales growth throughout the year. Hyundai, hampered by fewer launches, aims to revive momentum with the recently introduced Venue and an aggressive lineup -- it plans to roll out 26 new models in India by FY30.