The looming spectre of a global tariff war, which could spark stock market turbulence and erode returns on mutual fund SIPs, may hit automobile sales in India, according to the Federation of Automobile Dealers Associations of India (FADA).

“If investors see their disposable incomes shrink in tandem with market volatility, discretionary spending—like auto purchases—may well suffer,” the auto dealers’ lobby said in a statement.

In the passenger vehicle segment, new launches and strategic marketing can offer a lift, but widespread concerns remain about subdued consumer sentiment, it said.

In commercial vehicles (CVs), the picture is similarly nuanced, with dealers expecting only a modest pickup in segments like school buses and passenger carriers while freight demand remains patchy. “Overall, despite the prospect of incremental growth, lingering caution colours the outlook for FY26 as the health of the auto sector will hinge on how effectively stakeholders manage financing challenges, adapt to a shifting global trade environment and better inventory management,” FADA said in its long-term outlook on the sector.

Dealers across India are “cautiously optimistic” looking ahead to FY26, with FADA projecting mid to high single-digit growth in the two-wheeler segment and low single-digit growth for both PVs and CVs. “Many dealers pin their hopes on a combination of upcoming model launches and renewed interest in electric vehicles. Yet, significant headwinds dampen overall optimism. Financing remains a persistent challenge—dealers note that credit norms have tightened in recent months, and the need for further rate cuts by the RBI to bring down borrowing costs. Meanwhile, extended price hikes from OBD-2B norms weigh on consumers’ budgets, potentially impacting vehicle sales,” it said.

In its near-term outlook, FADA warned that as April dawns, auto dealers across India brace for an uncertain month shaped by both domestic and global factors. “IMD’s warning of intense heatwaves looms over consumer footfall and infrastructure activity, while renewed tariff tensions on the international stage add market volatility and rattle buyer sentiment. Despite these headwinds, nearly half of surveyed dealers still expect April sales to be flat and over a third foresee some growth—driven partly by regional festivals and the marriage season. Yet, the picture is far from rosy: nearly 60% of dealers across all segments report weak booking pipelines, signalling a fragile foundation on which any optimism must rest,” it said.

Within this delicate balance, each vehicle category faces its own blend of hopes and hurdles, said FADA. “Two-wheeler dealers anticipate a lift from festive buy-ins and marriage-season demand, but they remain wary of rising OBD2B costs, weak rural liquidity, and mounting competition from electric vehicles. Meanwhile, passenger vehicle showrooms look to pipeline bookings and localised celebrations—such as Akshay Tritiya, Bengali New Year, Baisakhi, Vishu etc.—to sustain momentum, even as many wrestle with surplus inventory and tentative consumer confidence. Commercial vehicle retailers, bolstered by ongoing infrastructure projects and school-bus needs, hope to maintain the tempo of a strong March, but heatwave disruptions and global trade anxieties could quickly stall the momentum. By mid-month, it will become clearer whether this mix of cautious optimism and underlying fragility can carry the industry through—or if the intense pressures of summer and an unsteady global outlook will prompt another round of recalibration,” said FADA.