India's automobile retail industry closed FY 2025-26 at a historic high of 2,96,71,064 units, registering a broad-based 13.30 per cent year-on-year growth that brought the market tantalisingly close to the 3-crore milestone. Five of six vehicle categories set all-time annual records, with only construction equipment bucking the trend.

The year, however, was a tale of two halves. The April-August period saw muted growth of 2-5 per cent monthly as consumers adopted a wait-and-watch approach ahead of anticipated GST 2.0 reforms. The inflection point came in September when the revised GST structure reduced effective tax burdens on mass-segment two-wheelers, small cars, three-wheelers and select commercial vehicle categories.

FADA President C S Vigneshwar characterised FY26 as "a landmark year for Indian auto retail," noting that the growth was "structurally sound, underpinned by improving affordability, widening mobility demand across urban and rural India, and a diversifying powertrain mix."

The festive period delivered spectacular results, with October recording an all-time monthly retail high of over 40 lakh units. Crucially, the momentum sustained well beyond the festive window — January, February and March 2026 each posted strong double-digit YoY growth, confirming that the demand upshift was structural rather than seasonal.

Category-wise performance

Two-wheelers finally reclaimed their pre-COVID peak, retailing 2,14,20,386 units at 13.40 per cent growth. The segment's recovery had been long awaited and was catalysed by GST-led affordability, improved rural cash flows and a broadening product portfolio spanning entry-level and aspirational segments. In March alone, two-wheelers surged 28.68 per cent YoY to 19,51,006 units.

Passenger vehicles crossed the 47-lakh mark for the first time at 47,05,056 units, growing 13.00 per cent. The segment benefited from a rich new-model pipeline, sustained urbanisation and the ongoing shift towards SUVs and alternative powertrains. PV inventory normalised dramatically from approximately 52 days in March 2025 to around 28 days by March 2026 — among the healthiest readings in recent years. Vigneshwar attributed this correction to "more disciplined dispatches, stronger retail pull, and a conscious effort by the dealer-OEM ecosystem to align wholesale more closely with ground demand."

Tractors were the standout performer, crossing 10 lakh retail units for the first time in history at 10,50,077 units, an 18.95 per cent surge driven by an excellent monsoon, strong rabi sowing and improving farm economics.

Commercial vehicles returned above the 10-lakh mark for the first time since FY19, retailing 10,60,906 units at 11.74 per cent growth. Infrastructure-driven freight demand and a particularly strong MCV sub-segment (up 22.98 per cent) powered the recovery. In March, the MCV segment stood out with 25.50 per cent growth, supported by infrastructure-linked goods movement and school-bus demand.

Three-wheelers set their third consecutive annual record at 13,63,412 units, growing 11.68 per cent, with the EV transition now accounting for over 60 per cent of the segment's retail.

Construction equipment was the sole laggard, declining 11.70 per cent to 71,227 units as project-level delays and a high base weighed on volumes.

The powertrain transition deepens

The fuel-mix data underscores how far India's powertrain transition has come. In the three-wheeler segment, EVs now command a dominant 60.95 per cent share. PV CNG share rose to 21.98 per cent (from 19.60 per cent in FY25), while PV EV share climbed to 4.25 per cent from 2.61 per cent. Two-wheeler EV share edged up to 6.54 per cent, with the monthly reading for March surging to 9.79 per cent — the highest ever, suggesting the segment is approaching critical mass.

CV electrification, while still nascent, nearly doubled its share to 1.83 per cent for the full year and hit 2.40 per cent in March. Total EV retail for FY26 stood at 24.52 lakh units, a 24.63 per cent expansion.

CNG continued to strengthen its position: PV CNG share touched 23.76 per cent in March (up from 20.75 per cent a year ago), while CV CNG held steady at around 11.79 per cent. The trend suggests that elevated fuel prices are accelerating, rather than dampening, the powertrain shift.

Rural narrows the gap

Rural India continued to close the gap with urban markets. For the full year, rural retail grew 13.05 per cent against 13.62 per cent in urban — near-parity that reflects expanding aspirational demand in the hinterland. Within PVs, rural demand meaningfully outpaced urban at 17.12 per cent versus 10.43 per cent. In March, the divergence was even sharper: total rural retail grew 26.49 per cent against 23.82 per cent in urban.

OEM market shares: key shifts

In the PV segment, Maruti Suzuki retained pole position with a 39.71 per cent share though this slipped marginally from 40.20 per cent. The more significant movement was below: Mahindra & Mahindra climbed to second position at 13.42 per cent (from 12.42 per cent), edging past Tata Motors at 13.04 per cent (from 12.87 per cent). Hyundai slipped to fourth at 12.29 per cent from 13.48 per cent. Toyota Kirloskar gained ground at 7.13 per cent (from 6.69 per cent), while Kia held steady at 5.94 per cent.

In March specifically, the picture was even more striking: Tata Motors surged to second place at 14.95 per cent, ahead of Mahindra at 13.87 per cent and Hyundai at 11.09 per cent — a sharp departure from the year-ago March when the three were clustered between 12 and 14 per cent.

In two-wheelers, Hero MotoCorp retained leadership at 28.40 per cent, Honda at 25.03 per cent, and TVS consolidated third place at 18.89 per cent (up from 17.49 per cent). Royal Enfield gained notably, rising to 5.18 per cent from 4.48 per cent. The most dramatic shift was Ola Electric's collapse from 1.82 per cent to 0.77 per cent, while Ather Energy climbed to 1.12 per cent from 0.69 per cent.

In commercial vehicles, Tata Motors led at 34.16 per cent (down from 35.69 per cent), Mahindra gained at 28.11 per cent (from 27.03 per cent), and Ashok Leyland held steady at 17.87 per cent.

Vigneshwar summed up the year: "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."