FY’26 Auto Retail
Reflecting on FY 2025-26 Auto Retail performance, FADA President Mr. C S Vigneshwar said: “FY 2025-26 has been a landmark year for Indian auto retail — delivering an all-time high of 2,96,71,064 units with a broad-based 13.30% YoY growth that saw five of six vehicle categories set new annual records. This is not just a number — it represents the industry approaching the 3-crore mark, a milestone that would have seemed distant just two years ago. What makes this year particularly significant is that the growth was structurally sound, underpinned by improving affordability, widening mobility demand across urban and rural India, and a diversifying powertrain mix.
The year, however, was not linear. The first five months — April through August — were a period of measured momentum, with monthly growth ranging between 2% and 5% as the market navigated residual caution from the previous year’s sluggish inventory cycle, selective financing constraints, and consumer wait-and-watch behaviour in anticipation of policy clarity. During this phase, enquiries remained tentative, conversions stayed uneven, and the dealer community exercised understandable restraint.
The turning point arrived in September with the implementation of GST 2.0. The rate rationalisation — which meaningfully reduced the effective tax burden on mass-segment two-wheelers, small cars, three-wheelers, and select commercial categories — improved real affordability at a time when the consumer was already positioned to respond. From September onwards, we witnessed a clear inflection: the festive convergence of Navratri and Diwali in October delivered an all-time record monthly retail of over 40 lakh units, and the momentum carried through the remainder of the year. January, February, and March 2026 each registered strong double-digit YoY growth, validating that the upshift was not merely festive but structural.
Category-wise, Two-Wheelers reclaimed their pre-COVID peak, retailing over 2.14 crore units and growing 13.40% — a recovery that had been long awaited and was finally unlocked by the combination of GST-led affordability, improved rural cash flows, and a broadening product portfolio that catered to both entry-level and aspirational segments. Passenger Vehicles crossed the 47-lakh mark for the first time, growing 13.00%, supported by a rich new-model pipeline, steady urbanisation, and the sustained shift towards SUVs and alternative powertrains. Tractors were the year’s standout performer, crossing 10 lakh retail units for the first time in history at 18.95% growth — a direct reflection of an excellent monsoon, strong rabi sowing, and improving farm economics. Commercial Vehicles recorded best ever figures and above the 10-lakh mark for the first time at 11.74% growth, led by infrastructure-driven freight demand and a particularly strong MCV sub-segment. Three-Wheelers set their third consecutive annual record at 11.68% growth, with the EV transition now accounting for over 60% of the segment’s retail. Construction Equipment was the sole exception, declining 11.70% as project-level delays and a high base weighed on volumes.
The powertrain transition deepened through the year. EV share improved in every major category — 2W EV rose to 6.54%, PV EV rose to 4.25%, and CV EV nearly doubled to 1.83%. CNG strengthened its foothold in PVs at 21.98% and in CVs at 11.79%. The total EV retail for the year stood at 24.52 lakh units, a 24.63% expansion, signalling that the transition is no longer directional but substantive.
On the demand-side, rural India continued to narrow the gap with urban markets. For FY’26, total rural retail grew 13.05% against 13.62% in urban — a near-parity that reflects the expanding aspirational footprint of auto retail in the hinterland, aided by better rural incomes, improving road connectivity, and increasing last-mile mobility needs. Within PVs, rural demand outpaced urban meaningfully at 17.12% versus 10.43%.
Inventory management improved significantly through the year. PV stock, which had been a sustained concern through FY’25 and the early months of FY’26, corrected from over 50 days to approximately 28 days by March — the healthiest reading in recent memory. This correction owed itself to more disciplined dispatches, stronger retail pull, and a conscious effort by the dealer-OEM ecosystem to align wholesale more closely with ground demand.
The year also saw an improvement in financing sentiment after a sluggish first half. Post-GST 2.0, as consumer confidence improved and ticket sizes became more accessible, financier appetite widened — reflected in improving disbursement rates and more competitive loan products, particularly in the mass 2W and small-car segments.
In sum, FY’26 closes as a year of vindication for the India growth story in auto retail — where the right policy intervention, coupled with an improving macro backdrop and a confident consumer, delivered record volumes and set the stage for the next phase of structural expansion.”
Mar’26 Auto Retail
Reflecting on March 2026 Auto Retail performance, FADA President Mr. C S Vigneshwar said: “March 2026 was an emphatic close to a landmark financial year. The industry retailed 26,92,449 vehicles — the highest-ever March in FADA’s records — posting a 25.28% YoY growth that was both broad-based and meaningful across categories. More than the headline number, what stands out is the quality of this close: it was driven by genuine retail pull rather than channel push, backed by enquiry conversion, healthy walk-in trends, and sustained consumer engagement right through the month.
Two-Wheelers led the charge with 19,51,006 units retailed (+28.68% YoY), the second-highest March ever recorded. Demand was broad-based across both urban and rural markets — urban grew 28.84% and rural 28.57% — reflecting a convergence that is increasingly characteristic of the post-GST 2.0 phase. The EV share in 2W surged to 9.79%, the highest monthly reading yet, suggesting that the electric transition in this segment is approaching a critical mass, particularly in urban and semi-urban markets where total cost of ownership is becoming the decisive factor.
Passenger Vehicles posted a record March at 4,40,144 units (+21.48% YoY), with rural PV growth once again outpacing urban at 26.48% versus 18.46%. The channel was in a markedly healthier position than the same month last year — inventory at approximately 28 days compared to over 50 days a year ago, and aged stock well within manageable levels. The fuel mix continued to evolve: CNG share in PVs rose to 23.76%, EV share improved to 5.11%, and petrol share moderated further — a structural shift that reflects both supply-side product expansion and demand-side consumer preference.
Commercial Vehicles closed at 1,02,536 units (+15.12% YoY). While the momentum was steady, it was the MCV sub-segment that stood out with 25.50% growth, supported by infrastructure-linked goods movement and school-bus demand. LCVs grew 11.99% and HCVs 18.55%, indicating that the growth was participatory across sub-segments. Notably, CV EV share improved to 2.40% in March — more than double the year-ago level — signalling early but visible adoption in the load segment.
The urban-rural dynamic in March was noteworthy — total rural retail grew 26.49% compared to 23.82% 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.
Overall, March 2026 closed the financial year on a note of strength and quality — not an isolated surge but a fitting culmination of the demand trajectory that has been building since September 2025.”
Near-Term Outlook (April’26)
Looking ahead to April’26, the near-term demand environment remains broadly constructive, though it enters a phase of measured transition after a strong year-end. Our survey indicates 50.56% of dealers expecting growth in April, with 40.15% expecting flat performance — a reading that reflects not pessimism but the natural recalibration that follows a record-setting March.
Seasonal factors will shape the month — April marks the start of a new financial year, which traditionally brings a brief reset as OEM schemes adjust, fresh inventory arrives, and the consumer re-calibrates post year-end purchase urgency. The marriage season should support demand in select northern and western markets, while Akshaya Tritiya in certain regions will provide an additional buying trigger.
The broader operating environment is, however, clouded by the West Asia situation. Our survey reveals that 53.2% of dealers have experienced some form of supply or dispatch disruption linked to the ongoing conflict, with 17.1% reporting significant delays of three or more weeks. While the impact has been most pronounced in the CV segment, PV and 2W dealers have also flagged selective variant-level delays. We are watching this closely.
On the fuel-price front, 36.5% of dealers report that rising or expected fuel prices are moderately to significantly affecting customer purchase decisions. This is a real friction point that bears monitoring — not because it will derail demand, but because it can elongate decision cycles and shift customer preference further toward CNG and EV options.
The positive side: credit conditions remain stable. An overwhelming 72.5% of dealers report no change in financing terms in the last 30 days — a material comfort given the external uncertainty. Liquidity at the dealer level is adequate, with 51.30% reporting good liquidity and 40.15% neutral. This suggests the system is not under financial stress even as caution rises on the demand side.
On balance, April should deliver steady performance — potentially softer than March on account of base and seasonality, but supported by residual momentum, a reasonably healthy pipeline, and stable financial conditions. The key variable will be the trajectory of the West Asia situation and its pass-through to fuel prices, supply availability, and overall consumer confidence.
FADA hence remains constructively cautious — structurally optimistic but operationally watchful for the near-term.
Next 3 Months Outlook (Apr-May-June’26)
Looking at the Apr–Jun’26 period, the retail outlook remains cautiously positive. Our survey shows 49.81% of dealers expecting growth, with 40.52% expecting flat performance and 9.67% anticipating de-growth — a distribution that reflects awareness of near-term headwinds even as the underlying structural demand remains intact.
When asked about FY’27 as a whole, confidence improves meaningfully — 74.72% of dealers expect growth, with the consensus clustering in the 3–7% band. This suggests that the dealer community views the current uncertainty as transitional rather than structural, and that the medium-term India demand story remains well-anchored.
Demand over the next three months will be shaped by several cross-currents. On the positive side, the marriage season will support retail in the northern belt through May, new model launches — particularly in the PV and 2W segments — will sustain enquiry pipelines, and the residual benefit of GST 2.0-led affordability should continue to support conversions. The rabi harvest, which is largely complete, should improve hinterland cash flows and sustain rural demand in the near term. Weather conditions — with the IMD forecasting normal-to-slightly-below-normal April temperatures — should support agricultural sentiment and mobility demand.
On the risk side, three factors dominate dealer concerns. The most cited risk (40.5%) is overall economic slowdown and consumer sentiment decline — a macro concern that reflects the cascading effects of geopolitical uncertainty on consumer confidence. The second-most cited risk (30.5%) is OEM supply disruption and model unavailability, a direct consequence of the West Asia conflict’s impact on global logistics, component supplies, and production schedules. The third risk (14.9%) is rising fuel prices dampening demand — a factor that has both direct and indirect effects on purchase urgency and operating economics, particularly in the CV and 2W segments.
The accelerating interest in EV and CNG vehicles — reported by 56.9% of dealers — is an important structural signal within this environment. Elevated fuel price concerns appear to be catalysing, rather than dampening, the powertrain shift, with customers increasingly factoring total cost of ownership into purchase decisions.
Overall, we expect Q1 FY’27 to be a period of moderate but healthy growth, with the sector normalising after the sharp re-rating of H2 FY’26. The structural demand drivers — urbanisation, rising incomes, rural mobility expansion, and electrification — remain firmly in place. The near-term risk lies in the speed and severity with which the West Asia situation evolves and transmits to fuel prices, supply chains, and broader consumer sentiment. Responsible pricing, disciplined inventory, timely supply, and sharper finance turnaround times will be the operational levers that differentiate performance in the months ahead.
FADA hence remains constructively cautious — structurally optimistic but operationally watchful for the next three months.
Key Findings from our Online Members Survey
Liquidity
Good 51.30%
Neutral 40.15%
Bad 08.55%
Sentiment
Neutral 54.65%
Good 36.06%
Bad 09.29%
Expectation from April’26
Growth 50.56%
Flat 40.15%
De-growth 09.29%
Expectation in next 3 months (Apr-May-June’26)
Growth 49.81%
Flat 40.52%
De-growth 09.67%
Expectation in FY’27
Growth 74.72%
Flat 21.93%
De-growth 03.35%
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