India passenger vehicle sales rise 10.6 percent in February

Domestic car dispatches in India recorded a fifth consecutive month of growth in February, as tax reductions continued to stimulate consumer demand across various vehicle segments. Data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday indicated that passenger vehicle dispatches to dealers rose by 10.6% to reach 417,705 units, up from 377,689 units during the same period last year.The sustained momentum follows significant tax adjustments implemented in September 2025. During that period, the government reduced taxes on larger SUVs to 40% by removing an additional levy, while taxes on small cars and two-wheelers were lowered from 28% to 18%. These fiscal measures have been credited with supporting demand through the ongoing wedding season, alongside a surge in new model launches and robust inventory build-ups.However, the industry faces potential headwinds stemming from geopolitical instability. Rajesh Menon, Director General of SIAM, highlighted the risks associated with regional tensions. > While the month of March has festive drivers, the recent conflict in West Asia remains a concern as it could impact the manufacturing processes and exports.Analysts from AXIS Capital Holdings Limited noted that while domestic demand is expected to remain resilient, export volumes could face pressure due to reduced shipments to Africa and the Middle East. Furthermore, a potential shortage of natural gas—a critical resource for paint shops and component manufacturing—could disrupt production lines. While inventory buffers are expected to mitigate the immediate impact on manufacturers, the long-term outlook remains tied to the stability of global supply chains. The automotive sector is a cornerstone of the national economy, accounting for approximately 7.1% of the country's GDP. Industry bodies anticipate that the growth driven by tax incentives will likely persist for several quarters, provided that external supply chain disruptions are contained.