Best-ever September for auto retail as vehicle sales rise 31.8%: FADA

India's auto retail market recorded its best-ever September in 2026, with sales rising 31.82% year-on-year to 25.37 lakh units, according to FADA's latest retail data.

India’s automobile retail market recorded its best-ever September in 2026, with 25,36,920 vehicles retailed during the month, according to data released by the Federation of Automobile Dealers Associations (FADA). Retail sales increased 31.82% year-on-year and 4.69% month-on-month, with five of the six major vehicle categories posting their highest-ever September sales.

The strong performance also helped the industry record its best-ever first half of a financial year. Total vehicle retail between April and September 2026 stood at 1,55,12,319 units, up 20.77% from the corresponding period last year.

Two-wheelers led the market with 17,90,188 units, registering 33.08% YoY growth and 4.41% MoM growth. FADA said the segment recorded its best-ever September and is now 15.3% above its previous September peak from 2018. Rural and urban markets grew at almost the same pace year-on-year, while the sequential festive pickup was stronger in urban markets.

Passenger vehicle retail also reached a new September high at 4,27,213 units, up 32.10% YoY and 6.17% MoM. Urban and rural markets recorded almost identical annual growth of 32.11% and 32.09%, respectively.

Commercial vehicle sales crossed the one-lakh mark for the first time in a September. Retail stood at 1,03,557 units, up 37.62% YoY and 14.09% MoM. Heavy commercial vehicles were the strongest performers within the segment, with sales rising 46.22% YoY.

Three-wheeler retail reached 1,32,570 units, up 22.25% YoY and 8.41% MoM, making it another record September. Electric vehicles accounted for 64.90% of three-wheeler retail. Wheeled construction equipment also recorded strong growth, with retail rising 38% YoY to 6,486 units.

Tractors were the only major category to see a sequential decline. Retail stood at 76,906 units, up 13.75% YoY but down 12.58% MoM, with FADA attributing the decline to a later festive calendar and patchy monsoon conditions.

EV retail also reached an all-time monthly high of around 3.34 lakh units in September, taking overall electric vehicle penetration to roughly 13%. Electric two-wheelers accounted for 11.58% of two-wheeler retail, while EVs made up 8.45% of passenger vehicle retail.

Within passenger vehicles, petrol and alternative fuels remained almost evenly matched. Petrol/ethanol accounted for 41.27% of PV retail, compared with 41% for alternative fuels. The latter included CNG/LPG at 23.11%, hybrids at 9.44% and EVs at 8.45%.

FADA, however, cautioned against reading too much into the 31.82% annual growth. September 2025 had seen buyers defer purchases ahead of the implementation of GST 2.0 on September 22, creating a low and distorted base for comparison this year. FADA said the cleaner indicators were the 4.69% sequential growth and the roughly 17% underlying run-rate growth during the first five months of FY2027, excluding the distorted September comparison.

Passenger vehicle inventory also remains a concern. Dealer inventory increased by another five days from the end of August to around 43-45 days, significantly above FADA’s recommended 21-day level. Around 60% of PV dealers reported holding higher inventory ahead of the festive season.

The industry now expects October to provide a clearer picture of demand, with Navratri and Dussehra falling in the middle of the month. According to FADA’s dealer survey, 75.57% of dealers expect vehicle sales to grow in October, while 19.46% expect a flat market and 4.98% expect a decline.

FADA described the near-term outlook as cautiously optimistic, while highlighting vehicle price increases, inventory levels and the high base created by last year’s GST-led festive demand as key factors to watch.

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