India Car Sales Rise by 26.12% in February 2026 with Increased Rural Demand; FADA “Cautiously Optimistic”

Passenger car retail sales in India climbed to 3.95 lakh units in February 2026, from 3.13 lakh units in the same month last year, marking a growth of 26.12% year-on-year, according to the Federation of Automobile Dealers Associations (FADA). The main contributor to this growth was rural sales, which climbed 34.21% YoY, surpassing the 21.12% increase recorded in urban markets. While the demand in rural markets was supported by healthy demand for entry-level and small cars, SUVs, and utility vehicles continued to dominate overall volumes. FADA attributed February’s performance to improved affordability following GST rationalisation, marriage-season purchases, and strong booking pipelines backed by new model introductions. That said, on a month-on-month basis, PV sales declined 23.12% from 5.13 lakh units in January 2026.

In the two-wheeler segment, retail volumes stood at 17.01 lakh units in February 2026, registering a 25.02% year-on-year increase over 13.60 lakh units sold in the same month last year. However, sales declined 8.22% from January 2026, when 18.53 lakh units were recorded.

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As for commercial vehicles, the sales rose 28.89% YoY to 1.01 lakh units, despite a 6.20% MoM dip. Medium commercial vehicles recorded the highest growth at 39.54%, followed by heavy commercial vehicles at 34.74%, while light commercial vehicles grew 24.39% over the previous year. Meanwhile, the sales of 3Ws at 1.17 lakh units overall, exhibiting a 24.39% year-on-year gain, though volumes dropped by 7.87% on a month-on-month basis.

All in all, the auto industry posted a healthy 25.62% year-on-year growth in February 2026, with 24.09 lakh units sold. That said, the sales declined 11.50% month-on-month from January’s 27.23 lakh units.

YTD Figures

During April 2025 to February 2026, the total vehicle retail sales surged 12.13% year-on-year to 2.69 crore units. Two-wheelers accounted for the bulk of volumes at 1.94 crore units (up 12.00%), followed by passenger vehicles at 42.50 lakh units (up 11.82%). Commercial vehicles saw a YoY rise of 11.34%, with 9.57 lakh units sold.

Growth Outlook

The outlook for growth in March continues to remain positive, with 75.51% of dealers anticipating growth due to the festive overlap of Navratri, Ramzan, Ugadi, Gudi Padwa, and Eid al-Fitr, alongside year-end purchases. The sales of two-wheelers are expected to benefit from healthy rural liquidity and strong booking pipelines, while passenger vehicles could see momentum from festive enquiries and depreciation-led purchases.

The demand for CVs is likely to stay resilient, supported by infrastructure spending and freight movement. As for the March–May 2026, the outlook remains 'cautiously optimistic', indicating a shift from rapid growth to a more stable pace.