India’s Passenger Vehicle (PV) retail market scaled a new high in FY2025-26, with total retails crossing the 4.7 million mark, while March capped the year with a record monthly performance—underscoring sustained end-customer demand across segments.

According to the data released by the Federation of Automobile Dealers Associations (FADA), PV retails rose 13% year-on-year to 47,05,056 units in FY26, the highest-ever annual tally for the segment. In March alone, PV retails jumped 21.48% YoY to 4,40,144 units—the strongest March on record—driven by robust rural demand, improved inventory alignment, and steady buyer sentiment.

“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,” said FADA President C. S. Vigneshwar. He added that the PV segment’s record performance reflects “structurally sound growth, underpinned by improving affordability, widening mobility demand across urban and rural India, and a diversifying powertrain mix.”

Commenting specifically on the strong finish to the year, Vigneshwar noted that March’s record performance was “not just a headline number but a reflection of genuine retail pull, backed by healthy enquiry conversion, sustained walk-ins, and consistent consumer engagement through the month,” indicating that the momentum was demand-led rather than driven by channel push.

Rural demand outpaces urban; inventory stress eases

Rural markets continued to outpace urban demand within PVs. In March, rural PV retails grew 26.48% compared with 18.46% in urban areas, highlighting the deepening consumption base beyond metros. This trend was visible through FY26 as well, where rural PV growth outpaced urban.

Channel health improved markedly during the year. PV inventory levels corrected to about 28 days by March, down from over 50 days a year earlier, indicating tighter alignment between wholesale dispatches and actual retail demand.

The PV segment also saw a steady shift in fuel preferences. CNG vehicles accounted for 21.98% of total PV retails in FY26, while EVs increased their share to 4.25%. In March, EV penetration in PVs rose further to 5.11%, reflecting rising consumer acceptance amid fuel price concerns and a widening product portfolio.

2Ws lead volumes; CVs sustain growth as overall retail surges

While PVs remained a key growth pillar, the broader auto retail market delivered a strong performance. Overall automobile retails rose 13.30% YoY to 2,96,71,064 units in FY26, inching closer to the 3-crore milestone. In March 2026, total vehicle retails climbed 25.28% YoY to 26,92,449 units, marking the highest-ever monthly tally.

Two-wheelers continued to anchor volumes, with FY26 retails rising 13.40% YoY to 2.14 crore units, reclaiming pre-COVID levels. In March, 2W retails surged 28.68% YoY to 19,51,006 units, aided by strong rural and urban demand as well as rising EV adoption, which touched 9.79% during the month.

Commercial vehicles, too, posted steady gains, with FY26 retails up 11.74% YoY to 10,60,906 units, crossing the 10-lakh mark for the first time since FY19. March CV retails rose 15.12% YoY to 1,02,536 units, supported by infrastructure-led freight demand and robust growth across sub-segments.

Looking ahead, FADA remains constructively cautious. While over half of dealers expect growth in April, geopolitical disruptions, fuel price volatility, and supply-side constraints remain key near-term risks. “However, with financing conditions stable and structural demand drivers intact, the industry appears well-positioned to build on FY26’s strong retail momentum,” the FADA President pointed out.