India's passenger vehicle industry achieved its best-ever quarterly and calendar-year performance in the third quarter of fiscal 2026, marking a significant milestone driven by strong consumer demand, policy support, and festive season momentum. The Society of Indian Automobile Manufacturers (SIAM) data reveals unprecedented growth across multiple vehicle categories, with passenger cars staging a notable revival alongside the continued dominance of utility vehicles.

Record-Breaking Q3 Performance

The passenger vehicle segment reached new heights during October-December 2025, with domestic wholesales surging to an all-time quarterly high. The strong performance was supported by robust demand across all major categories during the festive season.

The exceptional quarterly performance contributed significantly to pushing calendar year volumes to unprecedented levels, with PV dispatches during January-December 2025 reaching 4,490,000 units, representing 5% annual growth.

Passenger Cars Stage Strong Revival

Passenger cars demonstrated remarkable resilience in Q3 FY26, benefiting from improved market conditions and policy support. The segment's strong performance was aided by GST rate cuts and lower financing costs, with cars accounting for nearly one-third of total PV sales during the quarter.

The revival represents a significant turnaround for the passenger car segment, which had faced challenges from the structural shift toward utility vehicles. However, calendar year performance tells a different story, with passenger car volumes growing just 0.6% in 2025, highlighting the ongoing preference for SUVs and crossovers.

Utility Vehicles Maintain Growth Leadership

Utility vehicles reinforced their position as the primary growth engine for the passenger vehicle industry. UV sales growth of 20.9% in Q3 slightly outpaced passenger cars, demonstrating sustained consumer preference for this category.

The utility vehicle segment's dominance is evident from its 65% share of overall PV sales in 2025, with consistent growth throughout the year reinforcing consumer preference for higher-riding vehicles.

Export Performance Reaches New Heights

The passenger vehicle export segment delivered exceptional results, contributing additional strength to the industry's overall performance. International demand remained robust across key markets.

Steady demand from the Middle East, Africa, and Latin America supported the strong export performance, with the full-year growth of 16.0% significantly outpacing domestic market expansion.

Market Drivers and Industry Outlook

Industry executives attributed the surge to multiple favorable factors that improved vehicle affordability and consumer sentiment. Key drivers included GST rate cuts, personal income tax relief, and successive repo rate reductions by the RBI, which lowered financing costs and boosted discretionary spending. Festive optimism further drove showroom footfalls and conversions during the quarter.

The broader automotive industry also demonstrated strong momentum, with two-wheeler domestic sales rising to 5,696,238 units (up 16.9% YoY) and three-wheelers growing 14.0% to 215,211 units in Q3. Commercial vehicles posted double-digit growth driven by infrastructure and freight activity, indicating broad-based recovery across the automotive ecosystem.

India's automobile industry extended its growth momentum in December 2025, with sales across all major segments posting strong year-on-year gains, according to monthly data released by the Society of Indian Automobile Manufacturers (SIAM). The robust performance reflects continued consumer demand and favorable market conditions across passenger vehicles, two-wheelers, and three-wheelers.

Passenger Vehicle Segment Shows Strong Growth

Passenger vehicle dispatches from manufacturers to dealers rose 27% year-on-year in December, supported by continued demand for utility vehicles. Domestic passenger vehicle sales reached 3,99,216 units in December 2025, compared with 3,14,934 units in the year-ago period, marking a growth of 26.80%.

Two-Wheeler Segment Leads Growth

Two-wheeler dispatches demonstrated exceptional performance, increasing 39% year-on-year to 15,41,036 units in December, up from 11,05,565 units in the same month last year. This segment's strong showing reflects robust demand across motorcycles and scooters. Three-wheeler sales also contributed positively, rising 17% to 61,924 units compared with 52,733 units in December 2024.

Company-Wise Performance Analysis

Among passenger vehicle manufacturers, Maruti Suzuki India led with 1,78,646 units, driven by passenger cars and utility vehicles. Mahindra & Mahindra recorded 50,946 units, primarily from utility vehicles, while Tata Motors sold 46,017 units from its utility vehicle portfolio.

In the two-wheeler segment, Hero MotoCorp led with 5,48,439 units, primarily motorcycles, followed by Honda Motorcycle & Scooter India with 4,30,238 units driven largely by scooters. TVS Motor Company sold 3,25,694 units across motorcycles, scooters, and electric models.

Industry Outlook Remains Positive

SIAM noted that the industry entered the fourth quarter of 2025-26 with firm momentum after strong double-digit growth across all vehicle segments in the latter part of 2025. The organization expects steady traction in wholesale and retail volumes through the quarter, supported by year-end sales push, healthy booking pipelines, and full transmission of interest rate cuts announced in 2025.

The industry body highlighted that stable macroeconomic conditions and supportive government policies are likely to underpin growth into 2025-26. "While remaining watchful of geopolitical developments, the industry expects FY2025-26 to close on a positive growth trajectory, with policy-led tailwinds firmly in place, sustaining the robust performance witnessed in recent years," SIAM stated.