In July, India’s Light Vehicle (LV) wholesale figures increased by 9% month-on-month (MoM) to 398k units, translating to a modest 2% year-on-year (YoY) rise.

This total consisted of 339k Passenger Vehicles (PVs) and 59k Light Commercial Vehicles (LCVs) with a gross vehicle weight of up to 6T, with PV volumes expanding by 8% MoM and 1% YoY, while LCV sales surged by 13% MoM and 8% YoY.

Despite lackluster demand in urban markets, volumes were significantly bolstered by rural areas of the country during the month, aiding a recovery from the MoM decline experienced in June.

Retail sales of PVs and LCVs also increased by 9% MoM to 374k units in July, up from 342k units in June and 347k units in May, according to data from the Federation of Automobile Dealers Associations (FADA). PV retail sales grew by 10% MoM, propelled by robust demand in rural India and supported by the auspicious Ashadha Purnima period, as well as targeted sales schemes, new model introductions, and aggressive rural marketing strategies, as reported by FADA. On the other hand, demand in urban markets continued to be subdued. As a result, PV inventory levels remained stable at 55 days at the end of July.

Meanwhile, retail sales of LCVs increased by 3% MoM.

Overall, LV sales across the first seven months of 2025 edged up by 1% YoY to 2.9 million units. This figure includes 2.5 million PVs, marking a 2% YoY increase, and 403k LCVs, which held steady compared to the same period in 2024.

Looking ahead, the government’s decision to reduce the Goods and Services Tax (GST) from 28% to 18% on vehicles shorter than four meters (up to 1.2L for gasoline-powered vehicles and 1.5L for diesel-powered versions) could stimulate sales of Mini Cars, Sub-Compact Cars, and Sub-Compact SUVs. At the same time, larger vehicles are now taxed at a flat rate of 40%, whereas these vehicles previously attracted a higher rate of about 50%.

These tax reductions will take effect on September 22, just before the peak festival period, which is traditionally seen as an auspicious time for purchasing high-value items such as new vehicles.

At present, our forecast for India’s LV wholesales remains unchanged, with a conservative 1% YoY increase to 5 million units anticipated this year. PV sales are projected to rise by 1% YoY, while LCV sales are expected to expand by 3% YoY.

However, this projection may be revised upward in our next report to reflect the anticipated sales boost from the upcoming GST rate reduction.

This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center.