India's automobile market opened 2026 on a firm upswing, with vehicle retail surging 17.61% year‑on‑year in January to 27.22 lakh units, powered by robust rural demand, festive‑wedding season purchases and the continued tailwinds of post‑GST affordability gains.
Two‑wheelers and tractors led the charge, while passenger vehicles and commercial vehicles also logged solid growth, underscoring a broad‑based recovery stretching beyond metro markets. At the same time, dealer sentiment remains upbeat for February, with over 72% expecting further growth despite the shorter month and a high comparison base.
Key Highlights (January 2026)
- Overall Retail: 27,22,558 units (+17.61% YoY)
- Two-Wheelers (2W): 18,52,870 units (+20.82% YoY)
- Passenger Vehicles (PV): 5,13,475 units (+7.22% YoY)
- Commercial Vehicles (CV): 1,07,486 units (+15.07% YoY)
- Three-Wheelers (3W): 1,27,134 units (+18.80% YoY)
- Tractors: 1,14,759 units (+22.89% YoY)
- Construction Equipment (CE): 6,834 units (-21.09% YoY)
What's Driving This Growth?
Data released by the Federation of Automobile Dealers Associations (FADA) shows two-wheelers and tractors leading the charge, while passenger vehicles (PVs) and commercial vehicles (CVs) also posted healthy growth. Two-wheeler retail stood at 18,52,870 units, up 20.82% YoY. Tractors followed with 1,14,759 units, growing 22.89% YoY, showing sustained confidence in rural income trends and on-ground farm activity.
A key theme in January was the strength of 'Bharat' demand, alongside signs of steady normalisation in urban markets. In two-wheelers, rural markets accounted for roughly 56% of volumes, with rural sales up 19.77% YoY and urban up 22.19% YoY, indicating that growth is not limited to festive-only spikes. Dealers also highlighted sharper customer engagement and quicker digital follow-ups, with a visible tilt towards higher-value and mid-powered motorcycles, suggesting buyers are upgrading when affordability and financing align.
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How Passenger and Commercial Vehicles Scored
Passenger vehicles recorded 5,13,475 units, up 7.22% YoY. While PV sales remain urban-led (about 59.2% urban versus 40.8% rural), the growth story is increasingly being written in non-metro India. Rural PV retail rose 14.43% YoY, significantly ahead of urban growth of 2.75% YoY. This shift points to a deeper expansion of car ownership beyond top cities, helped by preference for SUVs and compact SUVs, improved product availability, and continued schemes. Notably, PV inventory levels softened to around 32–34 days, a constructive sign for channel health and working-capital discipline.
Commercial vehicles added further push to the recovery, with 1,07,486 units retailed, up 15.07% YoY. Growth was visible across tonnage bands, with LCV sales at 65,505 units (+14.94% YoY) and HCV sales at 34,287 units (+14.61% YoY), mirroring improving freight sentiment and replacement-led buying. Importantly, CV demand was balanced geographically, with rural growth (+16.25% YoY) edging urban (+13.94% YoY), reinforcing that the logistics upcycle extends beyond metro corridors.
Segments That Lagged
Not every segment participated equally. Construction equipment retail declined 21.09% YoY to 6,834 units, reflecting a high-base effect and category-specific recalibration even as the broader market strengthened.
February Forecast
Looking ahead, dealer sentiment for February remains upbeat despite the shorter month and a tougher base. FADA's survey shows 72.56% of dealers expect growth in February, with only 4.51% anticipating de-growth, supported by ongoing wedding-season tailwinds, steady financing conditions, and continued demand visibility across mobility and freight.
Category-wise, two-wheeler is expected to stay positive on improved enquiries, wedding-led mobility purchases, rural liquidity from crops, and growing acceptance of EV models. However, upside will be capped where stock/variant availability remains tight, net-net, outlook is growth to stable, with rural momentum still a key pillar.
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