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India's retail vehicle sales by dealers are expected to remain steady in December, a dealers' body said on Monday, driven by a rebound in demand following recent tax cuts that made some cars cheaper and ongoing year-end incentive schemes for consumers.

Overall sales grew 2.14% in November, the Federation of Automobile Dealers Associations (FADA) said, with sales defying expectations of a slowdown after the festive season.

Automobile dealers cited confidence, pointing to stronger enquiry pipelines, the ongoing wedding season, improved inventory levels as well as year-end consumer schemes.

India, in late September, cut goods and services tax on sports utility vehicles with engine capacities of more than 1,500 cc to 40% from about 50% and on small cars to 18% from 28% in a bid to spur consumer spending and bolster growth amid steep U.S. tariffs.

In October, the first full month after the tax cuts took effect, dealers' sales to customers grew 40.5% - a record high.

Passenger vehicle inventory, or average time a vehicle stayed in a showroom, has come down to 44-46 days in November, from 53-55 days in October, FADA said.

Earlier this week, car market leader Maruti Suzuki said there was a 37% on-year jump in retail sales of four of its most affordable small cars for November. This was more than double the 17% growth seen for some of its larger SUVs in the 40%-tax category.

The demand for cars was outpacing supply, Maruti's top sales executive, Partho Banerjee, said in a sales call.

About 64% of FADA's members said they expect growth in sales in December, while 74.3% said they see sales growth for the next three months.

For the next three months, FADA expects January price hikes, wedding-season demand and new 2026 models to spur sales, supported by liquidity from crop sales after harvest and government initiatives.