Festive Demand Drives Auto Sales Revival: September Shows Strong Recovery, October Expected to Surge

Festive Demand Drives Auto Sales Revival in September: October Expected to Deliver Stronger Growth

India's automobile sector witnessed a significant revival in September 2025 as festive season demand kicked in, with passenger vehicles and two-wheelers showing strong recovery momentum. The festive period, which commenced on September 22, brought much-needed relief to the industry after months of subdued performance.

According to research from Citi, the uptick in sales was driven by accumulated demand from August and the positive impact of recent GST rate reductions that made vehicles more affordable for consumers. Industry experts anticipate even stronger performance in October as the full benefits of tax cuts materialize alongside improved logistics.

Key Drivers Behind September's Recovery

The automobile industry's September performance was influenced by several positive factors that converged to boost consumer sentiment and purchasing activity.

GST Cuts Boost Affordability

Recent reductions in Goods and Services Tax rates on vehicles translated into lower prices for consumers, stimulating buying interest across segments. This tax relief came at an opportune time, coinciding with the festive season when traditionally consumers make big-ticket purchases.

Pent-Up Demand Release

Buyers who had postponed purchases in August returned to showrooms in September, creating a surge in retail activity. This deferred demand added to the festive season boost, creating a favorable sales environment.

Two-Wheeler Segment Performance

The two-wheeler category demonstrated robust growth across major manufacturers, signaling renewed consumer confidence in personal mobility solutions.

Bajaj Auto Strong Showing

Bajaj Auto recorded impressive numbers with domestic two-wheeler volumes rising 5% year-on-year. More remarkably, month-on-month growth stood at 48%, reflecting the strong festive momentum. Export performance remained stable with 12% YoY growth. However, commercial vehicle domestic sales dipped slightly by 1% YoY, while exports surged by an impressive 67% YoY.

TVS Motor Gains Traction

TVS Motor Company posted 11% overall growth in two-wheeler sales. Domestic sales climbed 12% YoY, with the electric vehicle segment contributing meaningfully with 8% volume growth. This demonstrates the increasing acceptance of electric mobility among Indian consumers.

Hero MotoCorp Export Surge

Hero MotoCorp, India's largest two-wheeler manufacturer, witnessed 5% growth in domestic sales with overall volumes rising 8% YoY. The standout performance came from exports, which nearly doubled with an extraordinary 95% YoY increase, showcasing the company's expanding global footprint.

Passenger Vehicle Segment Trends

The passenger vehicle segment showed mixed results, with retail demand outpacing wholesale numbers due to temporary logistical constraints that are expected to resolve in early October.

Maruti Suzuki Retail Strength

Maruti Suzuki India demonstrated robust retail demand with approximately 200,000 vehicle deliveries and an impressive 250,000 pending bookings. However, wholesale dispatches declined 8% YoY (excluding Toyota sales) due to logistical challenges. Including Toyota sales, domestic volumes were down 6% YoY. The bright spot was exports, which surged 52% YoY, pushing overall volumes up 3%.

Hyundai Recovery Signs

Hyundai Motor India showed signs of stabilization with domestic volumes rising 1% YoY. Export performance was particularly strong, climbing 44% YoY, indicating healthy international demand for Indian-manufactured vehicles.

Tata Motors Stellar Growth

Tata Motors delivered an outstanding performance with domestic passenger vehicle sales soaring 45% YoY. The commercial vehicle segment also performed well, with small commercial vehicles and pick-ups registering 30% YoY growth, reflecting strong economic activity and demand for goods transportation.

Mahindra & Mahindra Diversified Success

Mahindra & Mahindra reported 10% growth in utility vehicle sales, maintaining its strong position in the SUV segment. The tractor division witnessed exceptional performance with volumes surging 50% YoY, benefiting from Navratri demand, although trailer availability constraints limited potential sales.

Commercial Vehicle Dynamics

Ashok Leyland Mixed Results

Ashok Leyland, a major commercial vehicle manufacturer, posted higher truck sales with medium and heavy commercial vehicles up 5% YoY. However, bus volumes declined 9% YoY, possibly reflecting reduced demand from transport operators.

Premium Two-Wheeler Success Story

Royal Enfield Record Performance

Eicher Motors achieved a historic milestone with Royal Enfield recording its highest-ever sales at 124,328 units, marking a remarkable 43% YoY increase. Notably, larger models above 350cc also registered strong growth despite facing higher GST rates, demonstrating the premiumization trend in India's two-wheeler market.

Tractor Segment Shines

The tractor segment emerged as a particularly bright spot with robust volumes recorded across manufacturers. The strong performance was attributed to favorable agricultural conditions and the timing of Navratri, when rural consumers traditionally make significant purchases. However, industry observers noted that limited trailer availability constrained potential sales growth.

Logistics Challenges and Solutions

According to Citi Research, wholesale dispatches remained modest for several original equipment manufacturers due to two primary factors:

• Delayed dealer offtake: Dealers took longer to place orders, impacting dispatch schedules
• Logistics constraints: Transportation bottlenecks affected timely vehicle deliveries

These challenges are expected to ease in early October, potentially unlocking pent-up volumes and driving stronger wholesale numbers.

October Outlook: Strong Momentum Expected

Industry analysts anticipate a very strong October performance driven by multiple favorable factors:

• Full month impact of GST rate reductions
• Resolution of September's logistical constraints
• Continuation of festive season demand
• Improved dealer sentiment and inventory planning
• Ongoing consumer promotions and financing offers

Citi Research emphasized that broader sentiment trends remain positive, setting the stage for robust sales across passenger vehicles, two-wheelers, and commercial vehicles.

Investment Implications

The September recovery and positive October outlook present interesting opportunities for investors tracking the automobile sector. Companies demonstrating strong retail demand, export growth, and operational efficiency may warrant closer attention as festive season sales data continues to roll in.

The sector's performance will also provide insights into broader economic health, consumer confidence levels, and the effectiveness of government policy measures like GST rate adjustments in stimulating demand.

As India's automobile industry navigates through the festive season with renewed momentum, stakeholders across the value chain from manufacturers to dealers and component suppliers stand to benefit from the positive demand environment.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.