India’s vehicle retail sales rise 17.6% in January 2026, two-wheelers lead growth: FADA

India’s automobile retail sales rose a robust 17.61% year-on-year in January 2026 to 27,22,558 units, driven by strong rural demand, sustained urban recovery and improving freight activity, according to data released on Tuesday by Federation of Automobile Dealers Associations (FADA).

Two-wheelers led the growth with sales of 18,52,870 units, up 20.82% from a year ago, while passenger vehicles rose 7.22% to 5,13,475 units.

Commercial vehicle retail stood at 1,07,486 units, registering a 15.07% increase. Tractors posted a sharp 22.89% growth and three-wheelers climbed 18.80%. Construction equipment, however, remained under pressure, declining 21.09% year-on-year.

FADA President C S Vigneshwar said January delivered a “strong, broad-based start” to the calendar year, supported by post-GST momentum, healthy rural cash flows backed by harvest and wedding-season demand, and sustained visibility across mobility and freight.

“Importantly, the demand engine remains anchored in Bharat, with rural share at around 56%,” he said, adding that while rural volumes stayed robust, urban markets also showed a clear revival, signalling demand normalisation beyond festive-only buying.

FADA said rural two-wheeler sales grew 19.77%, while urban markets rose a stronger 22.19%, aided by higher enquiries, quicker digital follow-ups and a shift towards higher-value and mid-powered motorcycles. Dealer feedback, however, pointed to selective model-wise supply constraints and aggressive competitive discounting in some pockets.

Commercial vehicles reflected improving freight sentiment and replacement-led purchases, with light commercial vehicles rising 14.94% and heavy commercial vehicles up 14.61%. Growth was visible across both geographies, with rural CV sales increasing 16.25% and urban markets expanding 13.94%, indicating that logistics-led demand is not limited to metros.

Passenger vehicles remained largely urban-led at about 59.2% of sales, but growth momentum was stronger in non-metro India. Rural PV retail surged 14.43% year-on-year, significantly ahead of urban growth of 2.75%, highlighting the structural expansion of car demand beyond top cities, aided by SUV and compact-SUV preference, revival in entry-level models and continued promotional schemes.

FADA also noted that passenger vehicle inventory levels softened to about 32–34 days, a constructive sign of healthier channel discipline and improved working-capital efficiency.

The dealers’ body said sentiment for February remains constructive, with over 72% of dealers expecting growth.

“The near-term macro setup is supportive: a growth oriented Budget with a visible infra and agri thrust, policy continuity post GST 2.0, and rate stability after 2025’s easing are collectively improving affordability, financing comfort and purchase intent,” FADA said.

Over the next three months, nearly 80% of dealers expect sales to rise, FADA said, citing stronger enquiry pipelines, infrastructure activity and year-end buying.

While two-wheelers, passenger vehicles and commercial vehicles are all expected to stay on a positive trajectory, the body cautioned that shorter months, high base effects, election-related disruptions in select states and model-specific supply constraints could temper growth in some segments.