The auto industry set for growth over the Next Few Years as new research shows rising demand across India. According to a recent Incred Research report, the sector is moving toward strong recovery within two to three years. This positive trend comes from several government actions, including salary upgrades, lower taxes, and reduced interest rates. These steps are giving buyers more confidence and more spending power across cities, including Mohali and Chandigarh.
Salary revisions under the 8th Central Pay Commission will likely boost household income. The Union Cabinet approved the Terms of Reference in October 2025, and once the new salary structure takes effect, many families will have extra money. Higher income usually leads to more purchases, especially big ones like cars and bikes.
Moreover, the government cut taxes on small cars, two-wheelers, and commercial vehicles. Since September 22, 2025, GST on these vehicles dropped from 28% to a new rate of 18%. Because of this major change, more customers can afford new vehicles, and showrooms across states have already begun seeing more interest.
Lower interest rates also support buyers. The reduced cost of borrowing helps people take loans for vehicles more comfortably. As a result, banks and financing companies expect more auto loan applications over the next year.
Last year showed a similar pattern. The Nifty Auto Index jumped by 9% between August and September 2025 after a major tax cut. Although the index slowed afterward, analysts believe it is only a short break before it rises again.
During the April-June quarter of FY26, the auto sector recorded a strong performance. Many Original Equipment Manufacturers reported double-digit growth in net sales. This happened partly because the festive season arrived earlier, increasing buying activity, especially in Punjab and surrounding regions.
However, one challenge remained. Raw material prices increased and pushed up production costs. Even then, many companies protected their earnings before interest, taxes, depreciation, and amortization by selling more units. This higher volume helped maintain stable margins.
Two-wheeler sales grew well during the festive window from August to mid-November 2025, showing mid-teen growth. But passenger cars only reached mid-single-digit growth. Analysts say supply issues and price-sensitive buyers may have slowed car sales.
Meanwhile, GST reforms continue to improve the buying environment. Recent changes make vehicle purchases smoother and more affordable. With clearer rules and a better tax structure, companies expect steady demand from both urban and semi-urban buyers.
As disposable income rises due to salary revisions, families may feel more secure and more willing to buy new vehicles. This will support steady growth for manufacturers and dealers. The overall policy setup remains supportive, and many industry leaders believe India is entering a new phase of expansion.
In summary, the auto industry set for growth over the Next Few Years as government measures, strong demand, and improved financial conditions come together. These factors create a positive outlook for both buyers and the industry, making the coming years promising for India’s automobile market.
