The Indian automobile industry witnessed a strong demand-driven resurgence in October 2025, with the Commercial Vehicle (CV) and Two-Wheeler segments posting robust growth in retail sales. The implementation of GST 2.0 reforms, which reduced tax rates, acted as a primary catalyst, alongside strong festive sentiment and improved rural offtake, ICRA reports.

Commercial vehicles: LCVs drive retail momentum

The CV sector demonstrated strong underlying demand, with retail volumes reporting a robust 17.7 per cent year-on-year (YoY) growth and a significant 49.5 per cent sequential growth in October 2025.

Light Commercial Vehicles (LCVs) were the standout performers, with retail volumes growing 29.8 per cent YoY and 64.3 per cent sequentially. This was driven by logistics demand from rural areas, GST reforms, and strong festive buying.

Medium & Heavy Commercial Vehicles (M&HCVs) saw a slight decline of 1.4 per cent YoY in retail sales, influenced by fleet operators postponing purchases ahead of BS-VII norms. However, a 26.0 per cent sequential growth indicates a release of pent-up demand post-GST announcement.

CV wholesale dispatches reflect steady growth

Reflecting the positive retail environment, domestic CV wholesale volumes witnessed a healthy 11.4 per cent YoY growth in October 2025, with a 7.8 per cent sequential growth. For the first seven months of FY2026, wholesale volumes grew by 4.5 per cent YoY, mainly driven by increased freight movement and infrastructure development regaining momentum.

ICRA expects the Indian CV industry to register a modest YoY growth of 3-5 per cent in wholesale volumes in FY2026, aided by the resumption of construction and infrastructure activities and a steady economic environment.

Two-Wheelers: Record-breaking retail performance

The domestic two-wheeler market experienced a historic month, with retail sales surging 51.8 per cent YoY to a record high in October 2025, driven by GST rate cuts, festive demand, and strong rural offtake.

The electric two-wheeler segment continued its steady growth, with retail volumes reaching 1,44,365 units, a 4 per cent increase on a YoY basis. Their penetration in the overall segment remained stable at 6-7 per cent.

Two-Wheeler wholesale growth muted amid high base

In a stark contrast to the retail boom, wholesale dispatches saw only a marginal increase, inching up 1.5 per cent YoY to 2.1 million units in October 2025, reflecting a high base effect from the previous year. The agency noted that wholesale volumes remained flattish during the first seven months of the fiscal.

On the exports front, shipments reported a growth of 17.8 per cent YoY in October. For the seven-month period of FY2026 (April-October), industry export volumes have grown by 23.0 per cent.

ICRA estimates domestic two-wheeler volumes to register a growth of 6-9 per cent YoY in FY2026, aided by improved replacement demand following the GST rate cuts, an expected recovery in urban sentiment, and healthy rural incomes.