The Federation of Automobile Dealers Associations (FADA) has reported a record September 2026 for India’s automobile retail market, with total vehicle registrations reaching 25,36,920 units, up 31.82% year-on-year (YoY) and 4.69% month-on-month (MoM).
While September marked the industry’s best-ever September, FADA has cautioned against reading the 31.82% YoY growth in isolation. The unusually high growth was influenced by a low base in September 2025, when customers deferred vehicle purchases ahead of the implementation of GST 2.0 on September 22, 2025.
According to FADA, the cleaner indicators are the record monthly volumes, sequential growth over August and the underlying growth rate excluding the distorted September 2025 base.
The September performance also helped the industry record its best-ever first half of a financial year, with cumulative retail sales from April to September 2026 reaching 1,55,12,319 units, representing 20.77% YoY growth.
Auto Retail Sales Rise Across Key Categories
FADA reported growth across all major vehicle categories in September 2026.
| Category | September 2026 Retail | YoY Growth | MoM Growth |
| Two-Wheelers | 17,90,188 | 33.08% | 4.41% |
| Passenger Vehicles | 4,27,213 | 32.10% | 6.17% |
| Commercial Vehicles | 1,03,557 | 37.62% | 14.09% |
| Three-Wheelers | 1,32,570 | 22.25% | 8.41% |
| Tractors | 76,906 | 13.75% | -12.58% |
| Wheeled Construction Equipment | 6,486 | 38.00% | 25.55% |
Five of the six categories recorded their best-ever September retail performance. Commercial Vehicles also crossed the one-lakh-unit mark in September for the first time.
FADA Urges Caution Over 31.82% YoY Growth
FADA President Sai Giridhar said September was the best-ever September for Indian auto retail but cautioned that the headline growth rate needs to be viewed in the context of last year’s GST-related demand deferral.
“September’26 was the best-ever September in Indian Auto Retail, with the industry registering 25,36,920 units, up 31.82% YoY and 4.69% MoM. I would, however, urge that this headline be read with discipline: the 31.82% is the most base-distorted print of the year.”
He highlighted three stronger indicators: the record September performance across five of six categories, the best-ever first half of a financial year and the 4.69% sequential increase over August.
FADA also noted that excluding the distorted September figure, the first five months of FY2027 recorded growth of around 17%, which it considers a more representative indicator of the underlying retail run-rate.
Two-Wheeler Retail Hits Record September
Two-wheeler retail stood at 17,90,188 units, representing 33.08% YoY growth and 4.41% MoM growth.
The segment recorded its best-ever September and is now 15.3% above its September 2018 pre-Covid peak.
Rural and urban markets recorded almost identical YoY growth, at 33.11% and 33.06%, respectively. However, the sequential festive recovery was stronger in urban markets, with urban retail rising 5.29% MoM, compared with 3.62% growth in rural markets.
Dealers reported festive buying during the first half of September, steady rural and semi-urban demand, increasing interest in premium motorcycles and accelerating EV adoption.
Two-wheeler EV penetration reached a new high of 11.58%.
The segment continued to face some pressure from Shraadh-related purchase deferrals toward the end of the month, along with supply shortages of certain fast-moving models.
Commercial Vehicles Cross One Lakh Units
Commercial vehicle retail reached 1,03,557 units, up 37.62% YoY and 14.09% MoM, marking the category’s best-ever September.
Rural CV retail grew 40.44% YoY, ahead of 35.15% growth in urban markets.
Heavy Commercial Vehicles were the key growth driver, recording 46.22% YoY growth and a 21.28% MoM increase.
Dealers attributed the strong performance to continued GST 2.0 benefits, replacement demand, infrastructure and mining activity, bulk fleet purchases for steel and cement transportation, higher rural incomes and buying ahead of October price increases.
The usual half-year-end buying cycle also supported September demand.
Passenger Vehicle Retail Sets New September Record
Passenger vehicle retail reached a record 4,27,213 units, increasing 32.10% YoY and 6.17% MoM.
Urban and rural PV markets grew almost equally, at 32.11% and 32.09% YoY, respectively.
The fuel mix remained one of the most closely watched indicators. After alternative fuels overtook petrol in August for the first time, the two fuel categories moved almost into parity in September.
Petrol accounted for 41.27% of PV retail, marginally ahead of alternative fuels at 41.00%. Within alternative fuels, CNG accounted for 23.11%, hybrids 9.44% and EVs 8.45%.
FADA described the August crossover as an inflection rather than a decisive shift, with petrol and alternative fuels now effectively trading the lead from month to month.
Meanwhile, EV penetration reached a new high, while CNG share declined.
PV Inventory Remains Above Recommended Levels
Passenger vehicle inventory remains an area of concern for dealers.
PV inventory increased by another five days over August-end, reaching approximately 43–45 days. This remains substantially above FADA’s recommended 21-day inventory benchmark.
Around 60% of PV dealers reported holding higher inventory levels ahead of the upcoming festive period.
With OEM price increases also expected, maintaining inventory discipline and protecting consumer affordability are likely to remain important for the PV market through the festive season.
Three-Wheelers and EV Retail Continue to Gain
Three-wheeler retail reached 1,32,570 units, growing 22.25% YoY and marking the category’s best-ever September.
EV penetration in the three-wheeler segment stood at a strong 64.90%, underlining the continued electrification of last-mile mobility.
Across all vehicle categories, total EV retail reached an all-time monthly high of approximately 3.34 lakh units, taking overall EV penetration to around 13%.
Tractors Remain the Only Sequential Weak Spot
Tractor retail stood at 76,906 units, up 13.75% YoY, but declined 12.58% MoM.
FADA identified tractors as the only major category to record a sequential decline in September. The weakness was attributed to a later festive calendar and uneven monsoon conditions in some regions.
Wheeled Construction Equipment, meanwhile, recorded 6,486 units, registering 38% YoY growth.
October Festive Season Expected to Drive Growth
FADA expects October to provide a clearer indication of underlying market momentum as the festive season shifts into its main demand period.
According to the dealer survey, 75.57% of dealers expect growth in October, while 19.46% expect a flat market and 4.98% anticipate de-growth. The growth expectation is higher than the 67.09% recorded ahead of September.
The festive pickup is expected to gain momentum from the middle of October, with Navratri scheduled from October 11–20, followed by Dussehra.
Dealers expect demand deferred during Pitru Paksha to convert into vehicle purchases during the major auspicious days. Booking pipelines are already building, with 63% of dealers reporting bookings.
October will also provide the first clean year-on-year comparison following the GST 2.0 anniversary, although the market will still have to contend with the strong festive base from October 2025.
Two-Wheelers, PVs and CVs Poised for Festive Demand
Two-wheeler dealers expect stronger booking-to-retail conversion around auspicious dates, supported by rural cash flows, easier financing and growing consumer interest in EVs.
Passenger vehicle demand is expected to benefit from pending bookings during Navratri and Dussehra, supported by new launches and festive schemes.
Commercial vehicles are expected to remain relatively firm on the back of freight demand, infrastructure activity and a healthy enquiry pipeline.
However, FADA identified several risks, including the high October 2025 base, OEM supply constraints for fast-moving models, upcoming price increases and demand conditions in rainfall-deficient areas.
Overall, FADA has described the October 2026 outlook as “Cautiously Optimistic.”
Dealers Remain Positive on October-December Quarter
For the October-November-December 2026 period, 78.28% of dealers expect vehicle retail to grow, while 17.65% expect a flat market and 4.07% anticipate de-growth.
The period encompasses the core festive season, including Navratri and Dussehra in October, followed by Dhanteras and Diwali in early November, as well as the wedding season and year-end buying.
Dealer confidence has also improved following the record first half of FY2027. 49.5% of dealers have revised their FY2027 outlook upward, compared with just 16% who have revised their expectations downward.
However, FADA expects the quarter to face a demanding comparison base because October-December 2025 represented the first full quarter after GST 2.0 and benefited from significant pent-up demand.
Affordability Emerges as Key Risk
FADA believes the key measure of market health will be festive conversion rather than headline YoY growth.
Affordability is expected to remain the most important swing factor. While GST 2.0 has provided consumers with a degree of cost relief, successive input-cost-driven price increases could reduce that benefit.
FADA also highlighted OEM dispatch discipline and elevated passenger vehicle inventory as important monitorables.
At the same time, the structural drivers of the market remain supportive, including rural consumption, infrastructure-led goods movement, a strong product launch pipeline and increasing vehicle electrification.
For the October-December period, FADA therefore maintains a cautiously optimistic outlook, with festive conversion, affordability and inventory discipline expected to determine the durability of India’s auto retail recovery.
