Auto dealers see strong festive demand; September to unlock GST-driven discounts

Vehicle retail sales in the country grew 2.84% year-on-year in August 2025, supported by strong festive enquiries and robust bookings across segments, though a part of demand was postponed to September as buyers awaited the benefits of the upcoming GST 2.0 regime, the Federation of Automobile Dealers Associations (FADA) said on Monday.

According to data released by the industry body, two-wheeler sales grew 2.18% YoY, passenger vehicles rose 0.93%, commercial vehicles advanced 8.55%, and tractor sales surged 30.14%.

On the other hand, three-wheelers declined 2.26% and construction equipment fell 26.45%. On a month-on-month basis, overall retails were flat at 0.02%.

FADA President C S Vigneshwar said August traditionally ushers in festive cheer with Onam and Ganesh Chaturthi.

“Customers continued to show strong enthusiasm with high enquiries and robust bookings, ensuring vehicles are aligned for auspicious festive deliveries. The only issue was conversion, which slowed due to the benefits of GST 2.0 kicking in from September,” he noted.

Retail sentiment in the two-wheeler segment was supported by festive enquiries, but excessive rains and localised floods in North India disrupted rural mobility. Erratic supply of popular scooter models also impacted conversions.

Similarly, passenger vehicle sales were hit by heavy rains in some states, uneven supply of high-demand models and elevated inventory levels of around 56 days, even as enquiries and bookings remained healthy.

Commercial vehicle retails grew on the back of e-commerce contracts and replacement demand but softened marginally on a month-on-month basis.

Dealers reported that speculation around GST cuts led to deferment of some purchases in the last week of August.

Tractor sales, meanwhile, registered exceptional growth, benefiting from a strong monsoon, improved rural liquidity and a favourable crop outlook.

On the landmark GST 2.0 reform, which will be rolled out from September 22 with simplified slabs of 5, 18 and 40%, Vigneshwar said, “Under the visionary leadership of Hon’ble Prime Minister Shri Narendra Modi ji, GST 2.0 marks a historic, people-first reset — moving India towards a citizen-friendly ‘Simple Tax’. It embodies courage, consensus and clarity in indirect taxation.”

He added that the announcement has only strengthened buyer optimism, with many families aligning their purchases with the forthcoming reduced GST rates.

It has not dampened demand but merely deferred a part of it to September, when we expect festive deliveries and conversions to gather full momentum, he said.