TL;DR
The Indian automotive sector reported strong Q3 FY26 growth driven by GST reforms and rural demand, with an optimistic forecast for 2026 despite potential cost challenges.
India's automobile industry showcased a strong performance in the October–December 2025 quarter (Q3 FY26), with passenger vehicle volumes rising 20% year-on-year. This growth was significantly bolstered by Goods and Services Tax (GST) reforms, a resurgence in rural demand, and sustained festive momentum. Improved affordability, easier financing options, and recovering consumer sentiment contributed to broad-based volume growth across passenger vehicles, two-wheelers, and commercial vehicles.
The outlook for the Indian auto sector in 2026 remains optimistic, with expectations of sustained momentum. Key drivers include a growing trend towards 'premiumisation', where consumers opt for higher-value vehicles with advanced features. While the industry anticipates continued strong demand, potential challenges such as a weakening rupee and rising raw material costs could impact profit margins for automakers.
