Overview : Divergent Market Realities in October 2025

Global automotive performance in October 2025 underscored the divergence between mature and emerging markets. Aggregate sales momentum fragmented along policy and affordability lines, with the U.S. adjusting to expired EV incentives, India recording its strongest festive-season volumes in history, China nearing majority electric penetration, and Japan managing contraction at home despite hybrid export resilience. Exhibit 1 (Cross-Country Comparison of Total Auto Sales, October vs September 2025) visualizes the variation in headline volumes, highlighting month-to-month decoupling among major economies.

Across these four markets, policy decisions were the primary demand drivers. In the United States, the end of federal EV tax credits on September 30 shifted consumer behaviour sharply into Q3, leaving October weaker despite stable economic conditions. In contrast, India’s GST 2.0 reform, which reduced the automotive tax bracket from 28 to 18 percent, amplified festive-season bookings far beyond prior years. China maintained consistent double-digit growth through New Energy Vehicle (NEV) subsidies and industrial policy support, while Japan faced domestic headwinds from a strong yen, aging demographics, and cautious consumer spending. The combined outcome was a global market that appeared strong in aggregate but fractured in composition - growth concentrated in Asia, consolidation in North America, and stagnation in Japan.

United States : Normalization After the EV Incentive Rush

The U.S. auto industry in October 2025 entered a recalibration phase following an artificial third-quarter boom. Monthly sales reached 1.30 million units, down 3.1 percent YoY yet up 2.7 percent MoM. The seasonally adjusted annual rate (SAAR) moderated to 15.7 million, from 16.4 million in September. Analysts at Cox Automotive maintained a full-year forecast near 16.1 million units, emphasizing affordability constraints rather than macro weakness. Segment composition remained SUV-heavy: compact SUVs accounted for 17.7 percent (230 k units), mid-size SUVs 16.2 percent (210 k), and full-size pickups 14.2 percent (185 k). Passenger cars continued to erode—compact cars 85 k units, mid-size 60 k. Collectively, SUV and crossover categories approached one-third of national volume.

The electric-vehicle landscape changed sharply after the September expiration of federal purchase credits. Q3 2025 had delivered a record 438,487 EVs (+41 percent QoQ), but October share plunged to 5.3 percent as price elasticity and consumer hesitation re-emerged. Major OEMs—including Ford, Volkswagen, and Rivian—introduced temporary rebates to offset lost incentives, while the used-EV segment rose 24 percent YoY as affordability pressures redirected demand. Average Transaction Price (ATP) reached $50,080, a record and 3.6 percent higher YoY; incentive spending averaged 7.4 percent of ATP (~$3,700). Despite moderating inflation, financing rates above 7 percent kept monthly payments elevated, restricting first-time buyers. The outlook for 2026 hinges on three variables: fleet electrification pace, import tariffs on Chinese components, and the trajectory of credit costs. October’s figures thus represent a market shifting from policy-driven surges to organic, price-sensitive equilibrium.

India : GST 2.0 Reform Catalyzes a Festive-Season Boom

India recorded one of its strongest monthly performances on record as GST 2.0 reforms intersected with Diwali-season demand. The reduction of the top GST bracket from 28 to 18 percent acted as an immediate catalyst for both booking velocity and showroom traffic. Passenger-vehicle manufacturers registered double-digit growth nearly across the board.

• Tata Motors delivered 74,705 units (+81 percent MoM; +54 percent YoY), with electric models up 73 percent YoY to 9,286 units.

• Mahindra & Mahindra posted 71,624 SUVs (+31 percent YoY), a company record.

• Hyundai Motor India sold 53,792 units domestically and grew exports 11 percent.

• Toyota Kirloskar Motor achieved 42,892 units (+39 percent YoY).

• Maruti Suzuki logged roughly 400,000 bookings, with entry-level segments up 70 percent.

Commercial vehicles showed mixed performance: Mahindra’s CV division rose 14 percent YoY, while medium- and heavy-duty volumes were broadly flat. The tractor segment-maintained resilience Mahindra Tractors sold 72,071 units (+12 percent YoY); Escorts reported domestic +3.3 percent and export +38 percent. Two-wheeler sales exceeded 10 million units in H1 FY26, nearly unchanged YoY. Scooter volumes expanded modestly, while motorcycles declined 2 percent. Electric two-wheelers hovered near 130,000 units, flat YoY; Bajaj regained leadership as Ola slipped to fifth place.

Consumer surveys indicated 79 percent of buyers reinvested GST savings into higher-spec variants or larger vehicles, and 46 percent upgraded segment class. Environmental motivation rose—67 percent cited eco-benefits—but infrastructure and battery-replacement costs remain deterrents. Exhibit 2 (Year-over-Year Growth Comparison: U.S. Segments & India Manufacturers, October 2025) captures India’s exceptional spread versus the more muted U.S. normalization. The policy’s long-term implication extends beyond the festive spike. GST 2.0 establishes a structural reduction in ownership cost, likely supporting 4.3 million PV sales in 2025 and potentially 6 million by 2030, assuming financing and supply chains remain stable.

China : NEV Penetration Approaches Majority Status

China retained its position as the global growth engine, with New Energy Vehicles driving both domestic expansion and export momentum. September 2025 sales reached 3.226 million units (+14.9 percent YoY) and production 3.276 million (+17.1 percent). Cumulative January–September sales totaled 24.36 million (+12.9 percent YoY). NEV performance was the standout: 1.604 million units (+24.6 percent YoY) sold in September, representing 49.7 percent of total retail volume. Battery-electric models exceeded 1 million monthly units for the first time. Year-to-date NEV sales reached 8.9 million, including 222,000 exports (+13.8 percent YoY). Preliminary October data showed 1.613 million retail sales (-7 percent YoY) but NEV share rising to 55.9 percent amid overall softness—signaling continued substitution rather than contraction. Exhibit 3 illustrates the steady monthly climb in NEV penetration through 2025.

Policy support remains comprehensive. The 2025–26 government plan targets 32.3 million total vehicle sales (+3 percent) and 15.5 million NEVs (+20 percent), emphasizing R&D in autonomous systems, domestic chip supply, and solid-state battery innovation. Among automakers, BYD maintained dominance with 500,526 October deliveries, Geely followed at 108,722, and Tesla China delivered 68,280. Domestic brands captured roughly 67 percent share. However, price competition intensified—NEV manufacturers operate with production cycles twice as fast and cost bases 30 percent lower than legacy peers, yet more than half of dealerships reportedly face margin losses due to discounting.

Exports remained a key pillar: 300,000 NEVs (+66 percent YoY) shipped in September. Policymakers target 10 million vehicle exports by 2030, though rising EU tariffs and trade protectionism pose material risks. Overall, China’s auto sector in 2025 signaled a structural transition: an NEV-led, technology-intensive ecosystem approaching saturation domestically while seeking balance through overseas expansion.

Japan : Hybrid Strength Amid Domestic Stagnation

Japan’s market performance remained subdued. September 2025 sales totaled 428,214 units (-2.4 percent YoY), comprising 265,000 non-mini (-3.3 percent) and 163,000 mini (-0.9 percent) vehicles. Year-to-date volumes of 3.465 million (+5 percent) reflected early-year recovery offset by Q3 slowdown. Manufacturer shares revealed shifting dynamics: Toyota Motor Corp. sold 117,673 units (44.3 percent share, -5.5 percent YoY), Honda 31,346 (-11.3 percent), Nissan 23,243 (-20 percent), while Suzuki and Daihatsu posted gains of 39.5 and 9.8 percent respectively. Exports partially mitigated domestic softness. National production was 724,000 units (-0.2 percent YoY) with 343,000 exports (-1.4 percent). Toyota’s global first-half FY25 output reached 5.27 million units (+4.7 percent YoY)—a record. North American demand for hybrids expanded 10.5 percent YoY, offsetting weaker Asian sales. Domestic headwinds stem from an aging population, limited credit appetite, and yen appreciation, which eroded export profitability. Corporate guidance reflects caution: Nissan projected a ¥275 billion loss, while Toyota and Honda trimmed full-year margin targets. Strategically, Japanese OEMs continue leveraging hybrid leadership as a bridge technology while delaying full EV rollout until 2027-2028. Honda’s plan to launch 10 new models in India by 2030 (7 SUVs) illustrates regional diversification. Japan’s data underline a Division —technological competitiveness abroad coexisting with stagnant domestic replacement cycles. The nation’s automotive future depends on balancing electrification strategy with demographic and currency realities.

Comparative Insights : Demand Drivers and Market Composition

Cross-market analysis of October 2025 reveals four dominant themes.

1. policy divergence determined demand. The U.S. withdrawal of EV credits triggered contraction, while India’s tax reduction delivered an immediate consumption uplift. China’s sustained subsidies maintained NEV acceleration; Japan’s limited stimulus produced flat outcomes.

2. SUVs remained the universal growth anchor. In both the U.S. and India, SUV and crossover models comprised over one-third of sales. China’s NEV momentum is equally SUV-skewed as domestic brands launch extended-range crossovers. Japan, by contrast, sustains compact-kei popularity but depends on export-oriented SUV production.

3. Affordability dynamics bifurcated the consumer base. The U.S. reached a record $50 k ATP, India lowered effective prices via GST savings, and China compressed pricing through manufacturer competition. This spectrum explains why volume growth clustered in markets with either policy-induced affordability or structural cost advantages.

5. Digital and demographic factors evolved unevenly. The U.S. and China are now largely digitalized purchase ecosystems with direct-to-consumer EV channels. India accelerated online research and booking trends during the festive surge. Japan remains comparatively conservative, though younger urban consumers are beginning to embrace online configurators.

Together these trends outline a global industry increasingly defined by fiscal policy and cost competitiveness rather than uniform cyclical recovery.

Outlook : From Policy Cycles to Structural Transition

Looking beyond October 2025, the global automotive market enters a new phase of structural realignment rather than synchronized expansion.

• United States : Expect moderated replacement demand with ongoing affordability headwinds. EV adoption will depend on secondary-market liquidity and potential reinstatement of federal or state incentives.

• India : GST 2.0 ensures a sustainable upward shift in penetration rates; near-term moderation may occur post-festive season, but medium-term trajectory targets 6 million annual PVs by 2030.

• China : The world’s largest market transitions into a majority-electric paradigm. Consolidation among NEV startups is likely as margins compress, yet technology leadership (batteries, software, autonomous systems) remains unchallenged.

• Japan : Hybrid exports continue to underpin profitability while domestic stagnation persists. The pace of full-EV adoption will hinge on charging infrastructure investment and currency stabilization.

On a global scale, policy remains the decisive variable. Incentive structures such as EV tax credits, GST reforms, and targeted industrial subsidies are shaping demand curves more powerfully than raw GDP growth. As Exhibit 1–3 collectively demonstrate, October 2025 was less a snapshot of cyclical recovery and more a reflection of divergent structural trajectories—each market following its own fiscal and technological path toward an electrified future.