Federation of Automobile Dealers Associations (FADA) has reported a historic performance for India’s automobile retail sector in FY 2025–26, with total vehicle sales reaching an all-time high of 2.96 crore units, registering a robust 13.30% year-on-year growth.
The industry is now on the verge of crossing the significant 3-crore milestone, driven by strong demand across segments and improving affordability. According to FADA, five out of six vehicle categories achieved record annual sales, highlighting the broad-based strength of the market.
Two-wheelers led the growth with over 2.14 crore units sold (+13.40%), reclaiming their pre-COVID peak. Passenger vehicles also recorded a milestone year, crossing 47 lakh units (+13%), supported by rising urbanisation and strong demand for SUVs. Tractors emerged as the standout performer, surpassing 10 lakh units for the first time with an impressive 18.95% growth, reflecting strong rural demand and favorable agricultural conditions. Commercial vehicles also crossed the 10-lakh mark for the first time since FY19, growing 11.74%.
FADA President C S Vigneshwar described FY26 as a “landmark year,” noting that the growth was structurally strong, driven by improved affordability, rising rural and urban demand, and a diversified powertrain mix.
The financial year witnessed a two-phase trend. The April–August period remained subdued due to cautious consumer sentiment and anticipation around GST 2.0. However, post-September, the implementation of GST 2.0 significantly boosted affordability, triggering a sharp recovery in demand that continued through the festive season and into early 2026.
March 2026 capped the year on a strong note, with total retail sales reaching 26.92 lakh units—the highest-ever March performance—marking a 25.28% YoY growth. Rural markets outperformed urban areas, growing 26.49% compared to 23.82%, reflecting increasing demand from hinterland regions.
A key highlight of the report was the accelerating shift towards alternative fuel vehicles. Electric vehicles (EVs) and CNG models gained traction across segments, with EV penetration rising to 6.54% in two-wheelers, 4.25% in passenger vehicles, and 1.83% in commercial vehicles. Notably, EVs now account for over 60% of the three-wheeler segment.
Inventory levels also improved significantly, with passenger vehicle stock reducing to approximately 28 days from over 50 days a year ago—indicating healthier demand-supply alignment.
Looking ahead, FADA maintains a cautiously optimistic outlook. Around 50% of dealers expect growth in April 2026, while nearly 75% anticipate overall growth in FY27 within a 3–7% range. However, concerns remain around geopolitical tensions, fuel price volatility, and potential supply chain disruptions.
Despite these risks, FADA believes the Indian auto retail sector is entering a phase of sustained structural growth, supported by rising incomes, rural expansion, and the ongoing transition toward cleaner mobility solutions.
