The astounding performance of the market during the Diwali period was anchored by the GST revisions implemented on 22 September. The reduction of GST on small cars and two-wheelers—from 28% to 18%—provided immediate relief in ex-showroom prices. These cuts impacted vehicles under four metres in length with smaller engine capacities, categories that directly cater to the mass market.

This reform proved to be a turning point. The affordability boost led to a surge in consumer buying power, causing the industry to clock its highest-ever passenger vehicle sales in a single month. Domestic wholesale sales jumped by almost 17% year-on-year in October, with dealerships delivering close to 500,000 units.

Market leader Maruti Suzuki's entry-level and compact segments rebounded after being under pressure for years. Tata Motors and Mahindra & Mahindra extended their remarkable run, posting their own best-ever monthly volumes thanks to their popular SUV portfolios.

"This year's monsoon positively impacted rural liquidity and economic performance, which had a rub off on the auto sector," said Ashim Sharma, a senior partner at Nomura Research Institute. "The great performance in October got carried over to November, thanks to the start of the wedding season."

Double advantage

After the great festive boom in October and November, continued escalation in promotional activities is expected during the year-end. Automakers typically rush to clear the year's inventory of vehicles because the "2025 model" tag in January can negatively affect resale values. As a result, vehicles made toward the end of 2025 are offered with attractive incentives.

"December, therefore, is expected to see continued growth for the auto market from the year-end discount and offers coinciding with a bumper wedding season," said Sharma.

The icing on the cake is the recent interest rate cut, which could benefit buyers of cars on loans.

"This could surely add more momentum to the current high performance of the industry," he said.

For buyers, this is a golden opportunity. Layered atop the GST-driven price reductions are cash discounts on slower-moving or older stock, exchange bonuses with improved trade-in appraisals, lower interest on loans due to the rate cuts, and add-on value packs such as accessories and extended warranties. Together, the GST effect and year-end incentives offer a powerful double benefit rarely seen in previous clearance cycles.

Challenges remain

The sector's robust trajectory comes amid headwinds such as a weakening rupee, the ethanol-blending mandate for petrol cars, and a continued decline in diesel demand. Still, the end of the year traditionally marks a high-pressure period for dealerships and manufacturers, who rush to exhaust Model Year 2025 (MY2025) inventories before the calendar turns to 2026.

Unpopular variants tend to attract the steepest rate cuts. Citroën, Renault and Jeep—already under competitive pressure—may offer especially aggressive deals toward year-end.

"The weakening rupee will certainly have an impact on the industry. Especially considering that OEMs (original equipment manufacturers) still rely heavily on imported materials and equipment such as steel and electronics," said Subhabrata Sengupta, a partner at Avalon Consulting.

Launches by Tata Motors, Maruti Suzuki and Mahindra, with the Sierra, eVitara and the XUV 9s, respectively, should have a positive rub-off despite the expected price increase in January. The fresh footfalls in showrooms may result in better numbers of other models, Sengupta added.

Small hatchbacks

With compact SUVs and MPVs now dominating monthly sales, the small hatchback segment holds immense importance. These models—Alto, WagonR, Swift, and others—remain the natural choice for first-time buyers, who form a large chunk of year-end customers.

Maruti Suzuki and Tata Motors, the leaders in this space, often provide some of the highest total benefits. The combined offers on models such as the Alto K10, Celerio, S-Presso, Tiago, and Tigor can range from ₹40,000 to ₹70,000 or more.

Renault, with the Kwid and Triber models, leans heavily on large cash discounts and exchange or loyalty bonuses to compete. CNG variants and AMT trims frequently carry deeper benefits, mainly due to higher inventory levels than popular manual-transmission versions.

SUVs in demand

India's SUV wave has created an interesting dynamic in discounting patterns. High-demand models such as the Hyundai Creta, Mahindra Scorpio-N, and Tata Nexon continue to command long waiting periods, resulting in minimal incentives. Yet, one can expect offers in the range of ₹40,000 to ₹50,000, depending on the variant.

Mid-size SUVs are often the biggest beneficiaries of year-end push strategies. Models that face stiff competition or whose variant mix requires recalibration tend to carry generous offers. The Grand Vitara and Invicto are the most value-for-money propositions in Maruti's stable, with the top variants cheaper by ₹3.5 lakh. The strong hybrid and petrol variants of the Grand Vitara are also cheaper by ₹2.7 lakh and ₹1.35 lakh, respectively. As per dealers in Bengaluru, the Invicto also has the additional benefit of immediate availability.

The Maruti Jimny, which has struggled to match the numbers of the Mahindra Thar, too, will get cash discounts up to ₹1 lakh, depending on the variant. Maruti is additionally offering free extended warranties on their models.

German competitors Volkswagen Taigun and Skoda Kushaq typically match the momentum with sizeable benefits, occasionally exceeding ₹1.5 lakh on older model-year stock.

In the flagship SUV space, direct cash benefits are rarer, but exchange bonuses, loyalty schemes and corporate offers are common. Tata's premium lineup—Harrier, Safari, and the new Curvv—may also see increased showroom push, particularly as the brand expects heightened customer traffic with the arrival of the much-awaited Sierra, boosting the chances of clearing outgoing inventory more efficiently.

Sedan segment

Sedans, once central to the Indian automotive landscape, continue to face pressure from the SUV boom. However, this positions them as strong candidates for year-end deals. Companies are often motivated to clear out pending inventory in this category, making it a fertile hunting ground for value-conscious buyers.

Honda, seeking to protect its share in a shrinking segment, aggressively promotes the City and Amaze during this period. The mid-size sedan category—now dominated by the Skoda-VW duo—means models like the Virtus and Slavia can also attract benefits up to ₹1.5 lakh, especially for their premium turbo-petrol trims.

Hyundai's Verna, a model that once enjoyed robust demand, is expected to be available with compelling offers as dealers look to move unsold units.

With GST on electric vehicles capped at 5% and governmental encouragement for EV adoption, this segment remains attractive. Automakers preparing refreshed EV lineups for 2026 often push older batches through value-based offers such as free accessories, extended warranties or loyalty schemes. Well-known EVs like Tata's Tiago EV and Nexon EV are likely to be part of such stock-clearance efforts.

New launches

Adding further energy to the season are highly anticipated launches: Tata's Sierra, Mahindra's XEV 9s, Maruti Suzuki's eVitara, and the all-new Kia Seltos. Even as new models from Maruti and Mahindra represent the next generation of electric mobility, Tata has taken the ICE (internal combustion engine) route for now in the resurrection of its once-popular moniker, Sierra.

While the immense popularity of the Kia Seltos since it entered our shores has to be a case study in itself, the upcoming new generation of the Seltos will try to take on its sibling in the Hyundai Creta.

These new offerings are expected to significantly increase dealership footfall over the next several weeks. Such visits often create a "halo effect," where buyers who come to experience the new models end up considering more readily available or discounted current offerings.

This "spillover effect" is particularly advantageous during the year-end clearance window, enabling companies to sell both their future flagships and the remaining inventory of 2025 models more effectively.

Buyer checklist

Even with the abundance of discounts, buyers must remain vigilant. Confirming the manufacturing year is crucial, as MY2025 vehicles—especially those from the first half of the year—will command a lower resale value.

Given the pressure on dealerships to meet annual targets, negotiation remains a powerful lever. Importantly, consumers should evaluate the final on-road price and incorporate GST benefits, cash discounts, bonuses and finance schemes rather than focus solely on ex-showroom offers.