September 2025 proved to be the month the automotive sector had been waiting for. With the initial euphoria of GST 2.0 reforms, firming up dealership action ahead of the festive season, and a visible revival of retail visitation, factory dispatches in segments registered healthy momentum.
While individual sub-segments registered hints of stabilisation following a spate of runaway growth, the overall trend for September was one of guarded optimism supported by rallying urban sentiment and a perceptible bounce in rural corners.
The industry ended the month with 3.12 lakh passenger vehicles, over 21.6 lakh two-wheelers, 84,077 three-wheelers, and a steady performance from commercial vehicles, signalling that the festive quarter has begun on solid footing.
( Festive demand, GST cuts lift Navratri car sales 35%, overall retails up 6%)
Passenger Vehicles: Utility Vehicles steady, small cars stir back to life
The passenger vehicle segment posted dispatches of 3,12,791 units, marginally lower year-on-year but marking a return to momentum after a sluggish start to the quarter. The SUV and UV category, which has been the star of the market for three straight years, held its ground at 2,04,392 units, showing a mild contraction of 0.9 per cent in the domestic market, signalling that the segment may be heading towards a natural plateau after peaking at over 56 per cent share of the PV market.
Interestingly, what stood out this month was the revival of small cars, aided by the GST-linked price correction. Passenger car dispatches remained almost flat at 98,364 units, but dealers report better enquiry levels for entry-level models, something the industry hasn’t seen in many months.
Vans, however, lost traction with dispatches slipping 15.7 per cent to 10,035 units, as fleet operators continued to prefer compact UV-based people movers instead.
For now, the festive mood and improved affordability post-GST cuts have combined to give showrooms a much-needed lift, and manufacturers are loading stocks ahead of Diwali.
Two-Wheelers: Scooters lead as urban demand fires up
Two-wheeler makers had reason to cheer with dispatches rising 6.7 per cent to 21,60,889 units, powered primarily by urban and semi-urban scooter demand. Scooter volumes touched 7,33,391 units, growing 9.1 per cent, reflecting stronger adoption among city commuters and first-time buyers returning to the market.
Motorcycles held steady at 13,73,750 units, up 5.8 per cent, driven by sustained rural demand. However, what caught attention was a slight pickup in the moped category, which, despite being a low-volume segment, registered a softer contraction compared to previous months.
( Indian auto industry rebounds strongly after GST cut boost: ICICI Securities)
With improved financing availability and rising optimism in rural markets due to better kharif crop expectation, two-wheeler makers are entering the festival stretch with healthy stock rotation and improved dealer confidence.
Three-Wheelers: Strongest festive buildup yet
The three-wheeler segment, often a reliable indicator of last-mile commercial demand, posted 84,077 units, a growth of 5.5 per cent year-on-year. Passenger carrier three-wheelers led the charge at 71,657 units, up 8.9 per cent, supported by replacement demand and financing-led purchases in urban transport clusters.
Goods carriers stayed slightly muted with 10,442 units, reflecting stable but not overly aggressive fleet expansion. The segment, however, remains in its best-ever Q2 trajectory with operators preparing for peak cargo and people movement during the festive and wedding season.
Commercial vehicles: Freight demand supports momentum
While September monthly CV numbers are absorbed within quarterly reporting, movement across medium and heavy commercial vehicles remained consistent, supported by strong freight flows on intercity routes. Light commercial vehicles continued to benefit from the boom in intra-city logistics, especially with festive e-commerce scheduling beginning earlier this season.
With 2.39 lakh units clocked in the July-September quarter, the commercial vehicle industry posted an 8.3 per cent growth, and OEMs are cautiously optimistic that Q3 could surprise on the upside if infrastructure spending remains steady through the winter months.
Outlook: Festivals, finance and GST relief set the tone for Q3
The industry walks into October with optimism it hasn’t felt in nearly two quarters. Dealers are reporting higher bookings than last year, aided by improved EMI affordability after GST moderation. While OEMs remain watchful of global disruptions and commodity trends, the domestic demand environment appears structurally stronger, especially across entry-level and personal mobility segments.
If the current momentum sustains beyond Navratri, FY26 could well close on a positive trajectory across all core categories, a sentiment the industry hasn’t been able to express confidently in a while.