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New Delhi: India’s automobile retail market closed FY26 at a historic high of 2,96,71,064 units, registering 13.30 per cent year-on-year growth, as demand picked up sharply in the second half of the year following GST 2.0-led affordability improvements, the Federation of Automobile Dealers Associations (FADA) said on Monday.
The retail body said FY26 was a “two-phase” year, with April to August witnessing muted momentum due to cautious consumer sentiment and uncertainty around GST changes, while September to March saw a strong rebound supported by improved affordability and festive demand.
In FY26, two-wheelers recorded retail sales of 2.14 crore units, up 13.40 per cent, while passenger vehicles (PVs) rose 13 per cent to 47.1 lakh units. Tractors posted the highest growth at 18.95 per cent, crossing the 10-lakh milestone with 10.5 lakh units.
Whereas, retail sales of commercial vehicles (CVs) increased 11.74 per cent to 10.6 lakh units, while three-wheelers grew 11.68 per cent to 13.6 lakh units. Construction equipment was the only segment to decline, falling 11.70 per cent to 71,227 units.
FADA President C S Vigneshwar said that the strong growth reflected broad-based demand across urban and rural markets, supported by new model launches and improving affordability.
March 2026 best-ever retail month
FADA said March 2026 was the strongest-ever month for auto retail, with sales rising 25.28 per cent year-on-year to 26.9 lakh units.
Two-wheelers led the growth, with retail sales rising 28.68 per cent year-on-year to 19.5 lakh units. Passenger vehicles recorded their highest-ever March sales at 4.4 lakh units, up 21.48 per cent. Commercial vehicle sales increased 15.12 per cent to 1.03 lakh units, while tractor sales rose 10.87 per cent to 82,080 units.
FADA noted that rural markets outperformed urban markets in March, with rural retail growth of 26.49 per cent compared to 23.82 per cent in urban areas.
“The urban-rural dynamic in March was noteworthy — total rural retail grew 26.49 per cent compared to 23.82 per cent in urban, making March one of the rare months where rural growth decisively exceeded urban growth across most major categories. This is a validation of the widening geographic spread of auto retail demand in India and the role that improved rural incomes, better connectivity, and expanding personal mobility are playing in shaping the market,” added Vigneshwar.
EV and CNG penetration rises
The association highlighted that the powertrain transition continued to deepen in FY26. EV penetration in three-wheelers reached 60.95 per cent, while PV CNG share rose to 21.98 per cent. EV share stood at 6.54 per cent in two-wheelers and 4.25 per cent in PVs.
In the commercial vehicle segment, CNG share increased to 11.79 per cent, while EV penetration improved to 1.83 per cent.
FADA said passenger vehicle inventory levels improved significantly, with stock reducing to around 28 days in March 2026, compared to over 50 days in March 2025, indicating healthier dealer-level supply.
Outlook remains cautious
Looking ahead, FADA said dealer sentiment remains cautiously optimistic. Around 50.56 per cent of dealers expect growth in April 2026, while 49.81 per cent expect growth over the April–June period. However, risks such as West Asia-driven supply disruptions and fuel price volatility remain key monitorables.
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