India Auto Story 2025

Affordability Thrust: The new structure slashed the Goods and Services Tax (GST) on small cars (under 4 metres with specific engine capacity) from 28 per cent to 18 per cent. This significant reduction boosted affordability for first-time buyers, particularly in Tier-2 and Tier-3 cities, mirroring the success of Japan's historic Kei car movement.

Premium Rationalisation: Conversely, larger vehicles (over four metres) and premium motorcycles (above 350cc) now face a fixed 40 per cent tax, down from the previous combined rate of 43-50 per cent. This simplification, achieved by removing the additional cess, translated into significant price cuts on high-end models (e.g., up to Rs 23.5 lakh on a Mercedes-Maybach and Rs 1.80 lakh on a Toyota Innova Crysta).

Tesla's Debut: American EV giant Tesla made its official debut in India in July 2025, launching the Model Y in the premium segment and inaugurating its first retail centre in Mumbai. The company is actively scouting sites in Maharashtra and Gujarat for potential local assembly operations and has started rolling out its famed Supercharger network.

VinFast's Manufacturing Footprint: Vietnamese EV manufacturer VinFast formally entered the market, inaugurating its electric vehicle assembly plant in Thoothukudi, Tamil Nadu. The facility, its first outside Vietnam, is positioned to become a key export hub for right-hand-drive markets.

The ICE-EV Price Parity Challenge: Despite the EV momentum, the report notes that the sharp drop in prices for affordable Internal Combustion Engine (ICE) vehicles due to GST 2.0 may temporarily shift market momentum toward cheaper petrol/diesel models, challenging EV adoption in price-sensitive segments.

Record Festive Surge: The Navratri 2025 period witnessed a historic surge in consumer confidence and spending, with overall automobile retail sales jumping by a remarkable 34 per cent Year-on-Year (YoY), a direct consequence of the GST 2.0 price predictability.

Tata Reclaims No. 2:Tata Motors recorded its highest-ever retail sales in September 2025, selling a historic 60,907 units (a 47% YoY growth) and reclaiming the No. 2 position in the overall passenger vehicle market, overtaking Hyundai. This success was spearheaded by the Tata Nexon SUV.

The ICE-EV Price Parity Challenge: Despite the EV momentum, the report notes that the sharp drop in prices for affordable Internal Combustion Engine (ICE) vehicles due to GST 2.0 may temporarily shift market momentum toward cheaper petrol/diesel models, challenging EV adoption in price-sensitive segments.

GST Rationalisation: The reduction of the tax on luxury vehicles to a uniform 40 per cent (by removing the additional cess) created a predictable environment, driving pent-up demand.

Price Correction: Luxury brands passed on the benefits, resulting in price cuts of up to Rs 30 lakh on select models , with the Range Rover becoming nearly Rs 30 lakh more affordable. This 6-7 per cent price reduction is expected to stimulate demand by 10-15 per cent in FY2026.

The EV Edge: Electric Vehicle penetration in the luxury segment stands significantly higher at 11 per cent , compared to the mass market, driven by a more evolved customer base willing to experiment.

PLI Scheme: The Production-Linked Incentive (PLI) scheme is actively accelerating investment in future-focused components, including semiconductor chips, lithium-ion battery modules, and hydrogen fuel cell systems.

Global Integration: The impending India-UK Free Trade Agreement (FTA) is expected to provide a significant boost to the Indian auto component sector, particularly manufacturers with existing exposure to the UK market, offering cost advantages and growth prospects. The ancillary sector is rapidly transitioning from a parts supplier to a strategic global partner.

Mahindra's NU-IQ Platform: Mahindra showcased a genuine "show of intent" by unveiling four concepts on its new, versatile NU-IQ platform. These included the rugged, Thar-DNA-infused Vision.T electric SUV and the dedicated, modern Vision.SXT pickup concept, highlighting the platform's flexibility.

Tata's Design Renaissance: Tata Motors unveiled the Avinya concept, a luxurious electric crossover whose interior was deliberately conceived as a minimalist, comfortable lounge, emphasising serenity over mere gadgetry.

The Dual Pathway: Global players like Toyota highlighted the industry's dual focus by unveiling the urban-focused Urban BEV and the Hilux FCEV Concept (Hydrogen Fuel Cell Electric Vehicle), signifying that the future of sustainable mobility involves both battery-electric and hydrogen pathways.