Interestingly, the share of petrol vehicles was 48.11 per cent in July 2025, and 51.75 per cent in July 2024, indicating that the decline was mainly due to the controversy over the E20 fuel transition. The share of alternative fuel in July 2025 was 34.14 per cent, and 29.89 per cent in July 2024. The impact was such that in states like Gujarat, Haryana, Maharashtra, Rajasthan, and Uttar Pradesh, the share of CNG itself surpassed petrol-powered passenger vehicles (PVs). Meanwhile, the penetration of diesel in new car sales rose marginally from 16.32 per cent in June to 17.73 per cent in July, and was 17.75 per cent in July 2025.
"Consumer hesitation around the E20 transition nudged buyers towards CNG, hybrids, and EVs. There was a 6 per cent degrowth in petrol versus the same time last year. When we see that the share of diesel is almost flat versus last year, and higher than the June share of 16.32 per cent, this shows that the perception over E20 played a major role in customers' shift to alternative fuels," said Sai Giridhar, vice-president of Fada. This comes at a time when, for the first time in history, India's overall automobile retail sales witnessed their best ever July sales, with two-wheelers (2Ws), three-wheelers (3Ws), commercial vehicles (CVs), PVs, tractors, and wheeled construction equipment all at all-time July highs. The industry overall sales were seen at 2.59 million, up 26 per cent from the same time last year. This was the strongest July growth in the series outside Covid-distorted base years, dipping by just 0.16 per cent over a strong June.
Total EV retail sales also touched 327,901 units — the highest for any month in history — with 2Ws and commercial vehicle EV volumes touching all-time records, taking overall EV penetration to about 12.7 per cent from 9.6 per cent a year ago. The E20 fuel blending programme is part of the Centre's strategy to increase ethanol use in transport fuels, and reduce dependence on imported crude oil. In the last few months, concerns were raised by consumers, political parties, and industry bodies over the quality of E20 fuel and its potential impact on vehicle engines.
The rise of alternative fuel was evident in PVs across the country, with CNG overtaking conventional fuel in several states, according to an exclusive data accessed by Business Standard. In Haryana, the share of CNG increased from 36.2 per cent in July 2025 to 43.17 per cent in July 2026. During the same time, CNG increased from 31.63 per cent to 38.46 per cent in Uttar Pradesh, 29.35 per cent to 34.86 per cent in Rajasthan, 34.75 per cent to 37.72 per cent in Maharashtra, 38.9 per cent to 40.58 per cent in Gujarat, and 27.27 per cent to 31.20 per cent in Delhi. Interestingly, in July, the share of petrol in Haryana was 28.24 per cent (36.25 per cent in July 2025), Uttar Pradesh at 33.11 per cent (39.59 per cent), Rajasthan at 26.35 per cent (36.02 per cent), Maharashtra at 27.08 per cent (32.47 per cent), Gujarat at 26.19 per cent (29.22 per cent), and Delhi at 36.97 per cent versus 48.78 per cent last year. In Delhi, the shift was largely towards EVs, where the share increased from 8.32 per cent last year to 16.56 per cent in July this year.
"The numbers indicate that alternative fuel may overtake petrol anytime this year. Looking ahead to August 2026, dealer optimism firms considerably, with 74.30 per cent of dealers expecting growth in sales. PV inventory rose by another day over June-end to 33-35 days, well above Fada's recommended 21-day benchmark," Giridhar added.
Growth was emphatically broad-based rather than mix-led, with wheeled construction equipment at 46.07 per cent, 2Ws at 28.25 per cent, tractors at 28.1 per cent, CVs at 24.04 per cent, PVs at 19.13 per cent, and 3Ws at 16.16 per cent. July ranks as the 12th-highest retail month of the 151 months since January 2014 — a list otherwise dominated by festive months — and speaks to the structural depth of the India Growth Story. Dealers attribute this momentum to GST 2.0-led affordability, ease of retail finance, and favourable festival timing on a July 2025 base that had declined nearly 4 per cent.
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