New Delhi, April 6 Retail sales of vehicles across categories in India in 2025-26 grew by 13.3 per cent to 2,96,71,064 units, a record, compared to 2,61,87,255 units in the previous fiscal, with GST 2.0 helping overcome a subdued start to the year, the Federation of Automobile Dealers Associations said on Monday.
Passenger vehicle (PV) retail sales rose to 47,05,056 units in FY26, up 13 per cent from 41,63,927 units in FY25, the Federation of Automobile Dealers Association (FADA) said in a statement, adding that it is cautiously optimistic but watchful of the potential impact of the West Asia conflict on vehicle demand in India.
Similarly, two-wheeler (2W) sales also grew by 13.4 per cent to 2,14,20,386 in 2025-26 compared to 1,88,89,595 units in 2024-25.
In FY26, three-wheeler retail sales stood at 13,63,412 units, up 11.68 per cent from 12,20,834 units in FY25, according to FADA.
Commercial vehicles (CV) retail also witnessed a growth of 11.74 per cent to 10,60,906 units in FY26 as against 9,49,406 units in FY25.
Commenting on the industry performance, FADA President C S Vigneshwar said, "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 13.3 per cent year-on-year growth, which 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," he added.
"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," Vigneshwar noted.
He, however, pointed out that FY26 growth was not linear, as the first five months, April through August, were a period of measured momentum, with monthly growth ranging between 2-5 per cent, as the market navigated residual caution from the previous year's sluggish inventory cycle, selective financing constraints, and consumer wait-and-watch behavior in anticipation of policy clarity.
"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," Vigneshwar said.
From September onwards, 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, he said.
On the outlook, FADA said, "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."
Citing its survey, the dealers' body said 53.2 per cent of dealers have experienced some form of supply or dispatch disruption linked to the ongoing conflict, with 17.1 per cent 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, it added.
It also said on the fuel-price front, 36.5 per cent 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," it said.
On the credit front, it said conditions remain stable with an overwhelming 72.5 per cent of dealers reporting no change in financing terms in the last 30 days, a material comfort given the external uncertainty.
FADA remains constructively cautious, structurally optimistic but operationally watchful for the near-term, it said.
