FY26 auto sales surge 13.3% to all-time high, GST 2.0 fuels demand: Details

India’s automobile retail market closed FY26 on a strong note, clocking its highest-ever annual sales, according to data released by the Federation of Automobile Dealers Associations (FADA). Total vehicle retail sales rose 13.3 per cent year-on-year to 2,96,71,064 units in 2025-26, compared to 2,61,87,255 units in the previous fiscal, with the implementation of GST 2.0 playing a key role in driving demand during the latter half of the year, reported PTI. Passenger vehicle sales recorded a healthy growth of 13 per cent, reaching 47,05,056 units in FY26, up from 41,63,927 units in FY25. Two-wheelers, which continue to dominate the market, also saw a similar upward trend, with retail sales increasing 13.4 per cent to 2,14,20,386 units, compared to 1,88,89,595 units a year ago. Three-wheeler sales rose 11.68 per cent to 13,63,412 units, while commercial vehicle retail grew 11.74 per cent to 10,60,906 units during the same period. FADA President C S Vigneshwar described FY26 as a landmark year for the industry, noting that five out of six vehicle categories achieved record annual sales. However, he highlighted that the growth trajectory was not consistent throughout the year. The initial months from April to August saw modest gains of 2 to 5 per cent, as the market dealt with cautious consumer sentiment, financing challenges, and inventory-related concerns.The momentum picked up significantly from September, following the rollout of GST 2.0, which reduced the effective tax burden on mass-market two-wheelers, small cars, three-wheelers and select commercial vehicles. This improvement in affordability, coupled with the festive season demand during Navratri and Diwali, pushed monthly retail sales past the 40 lakh mark in October, setting a new record. The strong performance continued into the final quarter, with January, February and March 2026 all registering double-digit growth, indicating a more sustained recovery. Despite the strong overall performance, FADA flagged potential concerns going forward. Its dealer survey revealed that 53.2 per cent of dealers have faced supply or dispatch disruptions linked to the ongoing West Asia conflict, with 17.1 per cent reporting delays of over three weeks. While commercial vehicles have been the most affected, passenger vehicle and two-wheeler dealers have also reported delays in select variants. Additionally, 36.5 per cent of dealers indicated that rising or anticipated fuel prices are influencing customer buying decisions, making the outlook cautiously optimistic for the coming months.