Rural Demand Drives Passenger Vehicle Sales Growth in December 2025: FADA Data

India’s passenger vehicle retail market closed December 2025 on a firm note, supported by a noticeable acceleration in rural demand. 

Data released by the Federation of Automobile Dealers Associations (FADA) indicates that non-urban markets played a larger role in driving volumes, reflecting a broader spread of personal mobility demand beyond major cities.

The momentum in December also capped a year where the auto retail sector saw a recovery in the second half, following a relatively muted start to 2025. Policy measures, improved affordability and easing inventory pressures contributed to improved sentiment across segments.

Passenger Vehicle Sales Show Strong Year-on-Year Growth

Passenger vehicle retail sales increased by 26.6% year-on-year in December 2025 to 3,79,671 units. Rural areas recorded growth of over 32%, compared with nearly 23% growth in urban markets, underlining the faster pace of expansion outside metro regions.

For the full calendar year 2025, passenger vehicle retail sales rose close to 10% to 44.75 lakh units. Rural markets continued to outperform cities over the year, reinforcing their increasing importance to overall industry volumes.

Rural Markets Outperform Urban Centres

FADA data highlighted that rural passenger vehicle sales grew at a faster pace both in December and across the full year. While urban markets remained supportive, demand from smaller towns and villages showed greater resilience, aided by improved affordability and stable financing conditions in the latter part of the year.

Industry commentary described 2025 as a year with uneven momentum, where the first eight months remained subdued before demand strengthened from September onwards, as per The Economic Times report.

Broader Auto Retail Trends in 2025

Total auto retail sales across categories grew 7.7% year-on-year in calendar year 2025 to over 2.81 crore units. 

December alone saw a 14.6% rise in overall auto retail volumes, supported by growth in commercial vehicles, three-wheelers, two-wheelers and tractors. Construction equipment sales, however, declined during the month.

Inventory levels in the passenger vehicle segment moderated in December to around 37–39 days, suggesting improved balance across dealer networks.

Shift Towards Alternative Fuel Vehicles Continues

The data also pointed to a gradual shift in fuel preferences. During 2025, CNG-powered vehicles accounted for over 21% of passenger vehicle sales, while electric vehicles represented close to 4%. 

Similar trends were visible in December, indicating a steady diversification in mobility choices.

Outlook for Early 2026

Dealer sentiment for early 2026 remains positive. A majority of dealers surveyed by FADA expect growth in January, supported by festive demand, the wedding season and sustained rural traction. 

Expectations for the January–March quarter are also constructive, although financing turnaround times and product availability remain key factors to watch.

Read More: Reliance Industries Shares Plunge 5%, Mark Biggest Intraday Fall Since June 4, 2024.

Conclusion

The December 2025 data highlights the growing role of rural markets in India’s passenger vehicle sales, alongside a broader recovery in auto retail demand during the second half of the year.

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