Festive push lifts carmakers to strong October, but is it only the festivals?

India’s passenger vehicle industry recorded a strong performance in  October 2026, with manufacturers reporting higher sales as the festive season brought customers into showrooms. Domestic passenger vehicle wholesales rose 12.4% year-on-year to 5,28,384 units, crossing the five-lakh mark, according to Society of Indian Automobile Manufacturers (SIAM).

Maruti Suzuki led the market with domestic wholesales of 2,12,384 units, up 20.5% from 1,76,318 units a year earlier. Tata Motors Passenger Vehicles reported sales of 73,894 units, a 20.9% increase over 61,134 units in October 2025. Mahindra & Mahindra sold 73,338 vehicles, compared with 71,624 units a year ago, while Hyundai Motor India reported domestic sales of 62,799 units, up 16.7%.

Kia India also recorded its highest-ever monthly sales for the second consecutive month, with domestic wholesales rising 13.22% to 33,462 units. Toyota Kirloskar Motor, however, was an exception, reporting domestic sales of 29,521 units, down 26.7% from 40,257 units in the corresponding month last year.

While manufacturers have attributed the performance to festive demand, the numbers raise a larger question: is the October sales momentum driven entirely by the festive season, or are changes in affordability and consumer preferences also supporting the market?

Company	Oct 2026	Oct 2025	YoY change
Tata Motors PV	73,894	61,134	+20.9%
Mahindra (UVs)	73,338	71,624	+2.4%
Kia India	33,462	29,556	+13.22%
Toyota Kirloskar	29,521	40,257	-26.7%

The festive factor, but not the entire story

Festive periods traditionally bring a surge in automobile purchases, as consumers consider buying vehicles during occasions such as Navratri, Dussehra, Dhanteras and Diwali. Automakers and dealerships typically prepare for this period by building inventory, offering discounts and converting bookings into deliveries.

However, the timing of Diwali this year makes the October performance particularly interesting. Diwali falls on November 8 in 2026, compared with October 20 in 2025. This means October’s sales were recorded before the main Diwali buying period, although Navratri and Dussehra had already contributed to festive activity.

The growth was also not uniform across manufacturers. While Tata Motors, Maruti Suzuki and Hyundai recorded double-digit growth, Mahindra’s domestic wholesales increased by only 2.4%. Toyota, meanwhile, reported a decline in year-on-year sales.

This suggests that the festive season alone may not explain the industry’s performance. A combination of tax relief, improved affordability, financing conditions and changing consumer preferences is influencing purchases.

GST cuts continue to support

One of the biggest changes supporting the automobile market has been the government’s GST rationalisation in September 2025.

Effective September 22, 2025, GST on small cars was reduced from 28% to 18%. The revised classification covers petrol, LPG and CNG cars with engine capacities of up to 1,200 cc and lengths not exceeding four metres, as well as diesel cars with engine capacities of up to 1,500 cc and lengths not exceeding four metres.

The reduction lowered the tax burden on eligible vehicles, making entry-level cars more affordable and potentially encouraging first-time buyers to enter the market.

The impact was visible in October 2025, when passenger vehicle retail sales reached a record 5.57 lakh units, according to the Federation of Automobile Dealers Associations (FADA). The combination of GST rationalisation and festive demand accelerated purchases during that period.

The impact of the tax changes has extended beyond the initial festive window. In February 2026, domestic passenger vehicle sales reached 4,17,705 units, their highest-ever level for the month, registering 10.6% year-on-year growth, according to the Society of Indian Automobile Manufacturers (SIAM).

The industry has also benefited from other affordability-related measures. Personal income-tax relief has supported household purchasing power, while comparatively lower borrowing costs have helped consumers finance vehicle purchases. These factors have made it easier for some households to consider upgrading from two-wheelers to passenger vehicles.

Rural demand

Demand from rural markets has also become an important factor in the automobile industry’s growth.

FADA’s analysis of the 2025 festive season showed that rural passenger vehicle sales grew more than three times faster than urban sales during the period. Better agricultural prospects, favourable monsoon conditions and improved purchasing power supported demand beyond major cities.

This shift matters because rural and semi-urban markets offer manufacturers an opportunity to expand their customer base, particularly in the affordable vehicle segment.

However, the extent to which rural demand contributed to October 2026 sales will become clearer when the latest retail registration data from FADA is available.

SUV preference continues

Another important factor is the continued shift in consumer preference towards sport utility vehicles (SUVs) and utility vehicles.

Manufacturers have increasingly expanded their SUV portfolios to cater to buyers looking for more space, higher ground clearance and additional features. This has also changed the competitive landscape, with companies investing in new models and upgrades to maintain their market positions.

Mahindra’s October performance illustrates this trend. The company recorded domestic SUV sales of 73,338 units, its highest-ever monthly figure, although growth over the year-ago period remained relatively modest at 2.4%.

The trend also means that overall industry growth does not necessarily translate into similar gains for every manufacturer. Companies with stronger portfolios in popular vehicle categories may be better positioned to capture demand.

New launches and alternative powertrains

Product launches and a wider range of powertrain options are also contributing to competition in the passenger vehicle market.

Hyundai, for instance, attributed its October performance partly to festive demand and momentum across domestic and export markets. Its newly launched Bayon is expected to provide an additional boost to its product portfolio.

Kia, meanwhile, is seeing demand across different powertrain categories. The company recorded its highest-ever monthly electric vehicle sales in October, with volumes increasing 31% over September. Its compressed natural gas models also accounted for close to 10% of domestic sales. On this, Mr. Atul Sood, Senior Vice President, Sales & Marketing, Kia India, said, “The Kia Sorento has received an encouraging market response, with customers appreciating its advanced technology, sophisticated features and the fuel efficiency offered by its Hybrid powertrain. The contribution of our CNG models to overall sales, alongside our highest-ever monthly EV sales, further demonstrates that our multi-powertrain strategy is translating into tangible results. This reinforces our commitment to offering differentiated products and powertrain choices that respond to the diverse mobility needs of Indian customers.” 

The growing contribution of electric and CNG vehicles indicates that buyers are increasingly being offered alternatives to conventional petrol and diesel models. For manufacturers, having multiple powertrain options is becoming important as they cater to customers with different budgets, usage patterns and fuel preferences.

What comes next?

The November sales numbers will provide a better indication of whether October’s momentum can continue through the main Diwali buying period.

With Diwali falling in November this year, manufacturers and dealers will be watching whether the festive demand translates into sustained retail sales or whether a significant portion of purchases has already been brought forward.

The GST reduction has provided a structural affordability boost, while tax relief and financing conditions have supported consumer sentiment. However, the high base created by last year’s GST-led sales surge could make year-on-year comparisons more challenging in the coming months.

For now, October’s performance points to a combination of festive demand and broader changes in vehicle affordability and consumer preferences. Whether these factors can sustain growth after the festive season will be the next test for India’s passenger vehicle industry.