The expansion was driven largely by Goods and Services Tax 2.0 (GST 2.0) reforms, income-tax and repo-rate relief, strong rural demand and buoyant consumer sentiment during the festival season. The convergence of GST reforms, and Navaratri and Diwali contributed nearly 25 per cent to annual volumes.
By comparison, total automobile sales had been about 26.1 million units in FY25.
Growth in FY26 was broadbased across segments: Two-wheeler sales surpassed 21.1 million units, four-wheelers (cars and cabs) reached 4.6 million, and three-wheelers stood at around 1.35 million. These had been 18.8 million, 4.2 million and 1.2 million, respectively, in the previous financial year.
“GST reforms, coupled with a good festival season, drove the better showing across all categories except construction equipment. More importantly, rural India numbers were crucial for this rise. We expect this momentum to continue in FY27,” said C S Vigneshwar, president of the Federation of Automobile Dealers Associations (Fada).
A key driver during the year was the transition towards electric mobility, with electric-vehicle (EV) sales rising to 2.5 million from about 2.05 million in FY25. “We saw robust 12.1 per cent growth in two-wheeler sales, crossing the 21 million mark, underpinned by a significant 11.8 per cent rise in sales of petrol and ethanol-blended vehicle. However, the real story lies in the fuel transition: While traditional internal combustion engines (ICE) maintained their lead, we witnessed a 29.3 per cent expansion in EV adoption across all segments, including an 86.6 per cent surge in private electric cars,” said Sunil Dahiya, founder and lead analyst, EnviroCatalysts.
Experts say policies such as the PM E-DRIVE scheme (PM Electric Drive Revolution in Innovative Vehicle Enhancement scheme), the push for E20 ethanol blending and replacement cycles triggered by the new Motor Vehicle Act are reshaping India’s mobility landscape. “This shift is also evident in public and para-transit, with 7.4 per cent growth in the bus segment and a 62.8 per cent EV share in three-wheeler passenger transport, redefining last-mile and mass mobility. We are witnessing a nationwide transition towards a cleaner, more compliant and technologically advanced transport ecosystem,” said Dahiya.
October and November emerged as peak months, with sales hitting record highs of 4.06 million and 3.33 million units, respectively. The ongoing West Asia crisis has not dented buyer sentiment this March, with industry volumes already exceeding 2.4 million units, on a par with February 2026 and up nearly 12 per cent from 2.15 million in March 2025.
“Sales followed a sawtooth pattern through the financial year, driven by seasonal and regulatory cycles. Navaratri and Diwali drove a significant peak in October and November, accounting for nearly a quarter of annual volumes, supported by rural liquidity and aggressive OEM (original equipment manufacturer) financing,” said Dahiya.
He noted that January typically sees a dip as buyers defer purchases to the new calendar year to preserve resale value, while March records a secondary surge as corporate fleet operators accelerate purchases to claim depreciation benefits before the financial year-end. “These fluctuations were also influenced by policy-driven spikes, including pre-deadline registrations ahead of new safety mandates under the Motor Vehicle Act, and a temporary lull during the monsoon months, which typically affects construction and heavy logistics activity,” he added.
 "Auto sales continue to slide in Dec, likely to remain subdued for some time")