Auto retail sales see best-ever May, EVs steal the show on high fuel prices

Vehicle registrations rose 10% to a record 2.531 million units in May, with electric vehicle adoption accelerating across segments as higher fuel prices pushed consumers towards cleaner mobility

Braving the West Asia crisis, India's automobile retail sales posted the best-ever May numbers across passenger vehicles, three wheelers, tractors and overall registrations, posting a 10 per cent rise compared with the same month last year to 2.531 million units, the Federation of Automobile Dealers Associations (Fada) said on Monday.

 

More importantly, the number of customers shifting to electric vehicles (EVs) across all categories increased substantially to over 11 per cent in May due to higher fuel prices, compared with around 7 per cent during the entire financial year 2025-26. Passenger vehicles stood out with growth of 23 per cent, tractors 11 per cent, two wheelers 8 per cent, commercial vehicles 5 per cent and three wheelers 4 per cent during the period under review.

   

"Because of higher conventional fuel prices, EV share increased to around 11 per cent versus around 7 per cent for FY26. The sequential softness of 7 per cent versus April reflects the customary post-April seasonal moderation and a delayed south-west monsoon, keeping May largely a pre-sowing month across much of rain-fed Bharat. That growth held through this confluence of pressures underlines the resilience of the underlying demand," said FADA President C S Vigneshwar.

 

Passenger vehicle retails were the clear standout at 402,591 units, a robust 23 per cent expansion, with the Bharat-led character of the recovery firmly intact — rural markets grew by 30 per cent against urban markets at 19 per cent. "Overall alternative fuel share rose to 38 per cent in May, as compressed natural gas (CNG) share rose to 23 per cent and EV share improved to 7 per cent. Dealers pointed to a small-car revival co-existing with a sustained SUV mix," he added.

 

Two-wheeler retails stood at 1.84 million units in May 2026, up 8 per cent year-on-year (YoY), with urban markets growing 12 per cent YoY and rural markets 5 per cent YoY. Dealers attributed the steady commuter and rural participation to marriage-season buying and continued affordability under the GST 2.0 framework, even as heatwave conditions dampened showroom walk-ins in several markets and selective model-wise supply gaps tempered the momentum. In two wheelers, EV share climbed to 9 per cent from 6 per cent a year ago.

 

Commercial vehicle retails came in at 83,823 units, a 5 per cent YoY growth, with rural markets at 8 per cent YoY outpacing urban markets at 2.62 per cent — a reminder that goods-movement demand is broadening well beyond the metros.

 

Looking ahead to June 2026, dealer sentiment is measured, with 50.52 per cent of dealers expecting growth, 39.90 per cent anticipating a flat market and only 9.59 per cent foreseeing a decline. With the south-west monsoon having set in over Kerala in June and beginning its northward advance, demand expectations are anchored in the progress of the monsoon, early Kharif sowing preparations and the tail of the marriage season, supported by a stable financing environment after the Reserve Bank of India held the repo rate at 5.25 per cent in its June review.