While GST on ICE vehicles was brought down significantly, for electric cars it remained at 5 per cent.
The goods and services tax (GST) reforms clearly tilted the scales in favour of internal combustion engine (ICE) cars whose sales shot up by 20 per cent year-on-year in November, even as the electric vehicle penetration moderated across segments, according to data from Equirus Securities and the Federation of Automobile Dealers Associations (Fada).
While GST on ICE vehicles was brought down significantly, for electric cars it remained at 5 per cent. Passenger vehicle (PV) retail volumes jumped nearly 20 per cent on-year in November, supported by improved affordability, better model availability and spillover demand from the festival season, which had been partly constrained earlier due to supply issues, Equirus said in its latest fuel-wise monthly retail tracker.
On the other hand, electric car penetration came in at 3.7 per cent in November, well below the pre-GST rate-cut level of around 5 per cent, underlining a demand shift back towards ICE vehicles. This trend is especially visible in the luxury car segment.
While luxury battery electric vehicle (BEV) penetration is higher in 2025 compared to 2024, Mercedes Benz India said that overall industry BEV has declined sharply from 16 per cent to 12 per cent in the September-November period following GST 2.0.
The decline has sustained through these three months, establishing a clear trend that the tax cuts have pushed buyers back to ICE portfolios.
Santosh Iyer, managing director and chief executive officer of Mercedes-Benz India, said the brand has seen a structural shift in customer choice since the GST changes.
"Even as the overall BEV penetration for the luxury industry dropped, Mercedes-Benz has seen a constant shift towards ICE vehicles post the GST 2.0 announcements. Demand for entry-level GLA for instance, now available below ₹50 lakh for the first time, has significantly risen by more than 50 per cent in the September-November 2025 period compared to pre-GST 2.0," Iyer said.
GLA's average monthly sales during September-November 2025 grew by 50 per cent compared to the January-August period, with September and October recording the highest monthly volumes for the model this year.
Iyer added that a lower total cost of ownership and higher resale value compared with entry luxury BEVs are drawing customers to ICE models, a trend further accentuated by the recent price corrections. The broader PV market echoed this sentiment.
CNG penetration eased to 21 per cent in November from 23 per cent in October, while mild hybrids gained share, rising to 6 per cent from 5 per cent over the same period. Electric car sales still rose 63 per cent year-on-year to about 14,700 units, but failed to regain lost penetration as ICE demand accelerated faster.
Electric PV penetration stood at 3.7 per cent remaining below the pre-GST rate-cut level of 5 per cent as demand continues to shift toward ICE vehicles, Equirus noted.
Among leading OEMs, Tata Motors' market share declined to 41 per cent in November 2025 from 49 per cent a year earlier amid rising competition from JSW MG Motors and M&M, though the launch of Harrier EV has helped lift its market share from 35 per cent in June 2025.
JSW MG Motors, which had gained strong traction in FY25 with the Windsor EV, has seen momentum soften in FY26, with its share stabilising near 25 per cent, Equirus said. M&M has added to the competitive intensity, increasing its market share from 6 per cent to 20 per cent over the past year on the back of its new BE 6 and XEV 9E launches.
Fada data painted a similar picture.
PV retail sales climbed 19.7 per cent on year in November, defying the traditional post-festive slowdown, with inventories improving sharply to 44–46 days from over 50 days previously. Fada attributed the momentum to GST-led price reductions, strong marriage-season demand and improved availability of high-waiting models, particularly compact SUVs.
The moderation in EV penetration was not limited to cars. Electric two-wheeler sales declined 3 per cent on year to about 117,000 units in November, with penetration dropping to 4.6 per cent from around 7 per cent in the first half of the financial year, Equirus said.
The decline was driven by a post-GST demand surge for ICE scooters and motorcycles, coupled with supply-side constraints in the EV segment.
Electric three-wheelers, however, remained a bright spot, with sales rising 32 per cent year on year to about 83,700 units in November, while electric auto volumes increased 28 per cent.
In buses, EV penetration improved to 5 per cent from 2 per cent a year ago, though market shares remained volatile due to the tender-driven nature of the segment.
Overall auto retail grew 2.14 per cent on year in November despite a high base, supported by strong PV, CV and three-wheeler demand, Fada said. With continued GST benefits, OEM-dealer offers and improving rural indicators, industry participants remain cautiously optimistic, even as the EV adoption curve pauses amid renewed ICE affordability.
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