Retail sales of vehicles across all categories in India recorded a growth of 13.3% in FY2025-26, reaching 2,96,71,064 units. This is much more than 2,61,87,255 units of the previous financial year 2024-25. The new rates of GST 2.0 are believed to be a major contributor to this increase, which helped overcome the slow start of the year. According to PTI news, Federation of Automobile Dealers Association i.e. FADA gave information on Monday.
Sales of passenger vehicles
Retail sales of passenger vehicles (cars, SUVs etc.) stood at 47,05,056 units in FY26, which was 41,63,927 units in FY25. This represents an annual growth of 13%. FADA said they are cautiously optimistic, but see the impact of the war in West Asia on future vehicle demand.
two wheeler and three wheeler sales
Two-wheeler sales grew by 13.4% to reach 2,14,20,386 units in FY26, compared to 1,88,89,595 units in FY25.
Retail sales of three-wheelers stood at 13,63,412 units, up from 12,20,834 units in FY25, a growth of 11.68%.
commercial vehicle sales
Retail sales of commercial vehicles grew by 11.74% to reach 10,60,906 units in FY26 as against 9,49,406 units in FY25.
FADA gave this response
FADA President CS Vigneshwar said that 2025-26 was a landmark year for the Indian auto sector, with total sales at 2,96,71,064 units. It grew 13.3% year-on-year, and five out of six vehicle categories set new records. This is not just a figure, but it is an indication of the industry getting closer to the 3 crore units mark. He further said that this year’s growth was structurally strong, supported by better affordable options, growing mobility demand in urban and rural India and a diverse powertrain mix.
Trend of the year and impact of GST 2.0
Growth slowed from April to August in FY2026 (2-5% monthly), as the market was cautious due to last year’s slow inventory cycle and financial uncertainty. The turning point came after the implementation of GST 2.0 in September. The improvement in rates and reduction in tax burden increased the real affordability of small vehicles such as two-wheelers, small cars, three-wheelers and select commercial categories.
A new record was reached in sales during the New Year and Diwali festivals from September, monthly sales exceeded 40 lakh units. January, February and March 2026 also recorded double-digit YoY growth, which suggests that the growth is not just festive but structural.
Challenges and future scenario
The situation in West Asia and its impact on fuel prices, supplies and consumer confidence is being monitored. According to the FADA survey, 53.2% dealers saw some disruption in supply or distribution, while 17.1% reported major delays of three or more weeks. Due to increase in fuel prices, 36.5% dealers reported that it is affecting the purchase decision of the customer. Financial conditions are stable, with 72.5% of dealers seeing no change in financial conditions in the last 30 days. FADA said they are structurally optimistic, but remain cautious on operations in the near term.
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