India PV Sales Surge in H2 FY26: GST 2.0 Revives Small Cars, Retail Up 36%
India’s passenger vehicle (PV) industry is closing FY26 on a strong note, with wholesale volumes growing 14.71 per cent year-on-year between October 2025 and February 2026, driven by the GST 2.0 reforms introduced in September 2025, which lowered tax rates across vehicle segments.
Industry analysts project March 2026 wholesale figures at 440,000–450,000 units. With March 2025 wholesale at 381,358 units, overall H2 FY26 growth could exceed 15 per cent. For the full year, the PV sector is expected to close FY26 at 4.65–4.70 million units — up approximately 8 per cent from 4.3 million in FY25.
October 2025 — the first full month after GST 2.0 took effect — delivered the industry’s best-ever monthly wholesale figure of 4,60,739 units, further boosted by India’s peak festive season.
“It is a tale of two cities: while the first half was flat and stock volume was large, growth rates increased significantly in the second half, and OEMs have been trying to increase production to meet demand,” said an industry analyst. “The government’s GST intervention was a very significant event fuelling this growth.”
Small Cars Get a New Lease of Life
The biggest beneficiaries of GST 2.0 have been sub-four-metre vehicles — small cars, compact sedans, and compact SUVs — which saw tax rates fall 10 percentage points from 28 per cent to 18 per cent. This translated into price reductions of ₹40,000 to ₹1,20,000 depending on the model.
The impact was immediate. Alto and S-Presso sales jumped 48.85 per cent between H1 FY26 and October 2025–February 2026. The Baleno rose 16.93 per cent, the Grand i10 Nios 11.75 per cent, and the Swift 3.04 per cent over the same period.
| Model | Oct’25–Feb’26 | Apr’25–Sep’25 | Growth |
|---|---|---|---|
| Alto, S-Presso | 60,145 | 40,405 | 48.85% |
| Swift | 86,680 | 84,124 | 3.04% |
| Grand i10 Nios | 27,294 | 24,424 | 11.75% |
| Baleno | 84,179 | 71,989 | 16.93% |
“After GST 2.0, we have seen a surge in small car volumes. The incremental growth rate of smaller cars has been double that of larger ones on a year-on-year basis after the GST change,” said Ashim Sharma, Senior Partner and Business Unit Head, Nomura Research Institute.
In the compact SUV space, the Tata Nexon is set to emerge as the top-selling model in FY26, with growth of nearly 34 per cent. The Kia Sonet is estimated to register approximately 11 per cent growth by year-end. Despite the GST tailwind, the combined hatchback and sedan segment is expected to close FY26 at around 4 per cent growth — a significant recovery from the 13 per cent degrowth recorded in FY25.
Strong Retail Growth
The wholesale momentum has translated into strong retail performance, with October 2025 to February 2026 retail volumes up 36.46 per cent year-on-year. Dealer inventory levels have fallen sharply from around 85 days in H1 FY26 to approximately 27–29 days currently.
| Month | FY2025–26 | FY2024–25 | YoY Growth |
|---|---|---|---|
| October | 5,57,373 | 5,00,578 | 11.35% |
| November | 3,94,152 | 3,29,253 | 19.71% |
| December | 3,79,671 | 2,99,799 | 26.64% |
| January 2026 | 5,13,475 | 4,78,915 | 7.22% |
| February 2026 | 3,94,768 | 3,13,015 | 26.12% |
| Total | 22,39,439 | 16,39,846 | 36.46% |
“Inventory has come down from nearly 85 days in H1 FY26 to about 27–29 days in the present scenario. As FADA, we always recommend 21 days as the optimum inventory level for dealers,” said CS Vigneshwar, President of FADA.
West Asia Conflict: A Cloud on the Horizon
While the industry has regained strong momentum, the ongoing conflict in West Asia could overshadow these gains if it prolongs.
“While March has festive drivers in several parts of the country, the recent conflict in West Asia remains a concern for the supply chain, which could impact both manufacturing and exports. The industry will keep a close watch on evolving geopolitical developments,” said Rajesh Menon, Director General, SIAM.
Experts believe the immediate impact remains limited, but caution that market uncertainty and the fear of rising fuel prices could dampen buyer sentiment. Just as OEMs were working to calibrate production and inventory following the GST changes, the conflict emerged — potentially delaying the industry’s return to steady-state operations by several more months.
