Car sales in India surged by a robust 15.53 per cent to 4,65,920 in January this year compared to 2,93,465 units in the same month last year, according to data released by the Federation of Automobile Dealers Associations (FADA) on Thursday. Sequentially, month-on-month car sales were up 58.77 per cent.

"PV (passenger-vehicle) sales grew robustly, although some of that spike stems from December purchases registered in January for a 2025 model year advantage," FADA President CS Vigneshwar said in a statement.

"Inventory levels have improved, dropping by around five days to 50-55 days, suggesting improved supply-demand balance. Many dealers noted improved demand, but also pointed to last year's heavy discounting, which helped clear older models and shift registrations," he added.

The "positive indicators" listed in the FADA report include the marriage season and promotions. It expects the wedding demand for cars, SUVs and two-wheelers and fresh product introductions to sustain footfalls.

Improved liquidity in pockets, with the budget exempting all individuals who earn up to Rs 12.75 lakhs a year from paying income tax. The zero tax bracket now covers 1 crore individuals which is expected to boost the demand for vehicles.

Two-wheeler sales are up 4.15 per cent year-on-year to 15,25,862 units with new model launches, the ongoing marriage season demand and enhanced financing options giving a fillip to purchases.

This is also reflected in the rural segment posting a stronger growth in vehicle purchases at 18.57 per cent vs. 13.72 per cent in urban, according to FADA figures.

Commercial vehicle sales were up 8.22 per cent year-on-year to 99,425 units driven by higher freight rates and buoyant passenger carrier demand while three-wheeler sales grew 6.86 per cent to 1,07,033 units.

Tractor sales recorded a 5.23 per cent increase year-on-year at 93,381 units reflecting a better agricultural season that led to a rise in farmers' incomes.

It said select lenders offering better financing, plus backlogged commercial vehicle orders also lend guarded optimism for higher growth ahead.

It also highlights that dealer confidence has risen with nearly half (46 per cent) of them anticipating growth in February, echoing hopes of stable-to-rising sales.

Nearly half (46 per cent) of the FADA dealers anticipate growth in the coming month, while 43 per cent expect sales to stay flat and 11 per cent foresee a dip. The continuing wedding season, new cars and motorcycles, improved inventory management and better financing options are fuelling the optimism in what is a curtailed month.

"However, strict lending criteria, costlier vehicles and subdued demand in certain industrial sectors could weigh on overall performance," Vigneshwar said.