Affordability Is the Sole Factor Keeping Auto Sales in India High, Diwali Will Be the True Test: FADA

The Federation of Automobile Dealers Associations (FADA) has released its all-India sales data for the month of September 2026, characterising the month as the best-ever September on record, but with a major caveat. Total vehicle sales in India amounted to 25,36,920 units, which marked a 31.82 percent YoY increase. However, the basis for this comparison is the month of September 2025, during which sales were suppressed due to expectations of imminent price drops with the GST 2.0 regime.

Last year’s GST reforms, which came into effect on September 22, saw car prices reduce significantly across the board, with all manufacturers committing to pass on the full price reductions to buyers. Small cars in particular saw a surge in demand, with prices falling low enough to work for buyers who were previously unable to afford a purchase. The real test of the Indian market, according to the industry body, will be the month of October, compared to last year’s surge.

With the festive season in full swing, 75.57 percent of dealers expect growth in October 2026, with 19.46 percent predicting a flat market, but 4.98 percent still expect de-growth. FADA rates overall dealer sentiment as cautiously optimistic. For the Oct-Dec quarter overall, 78.28 percent of dealers expect growth, largely based on record-setting H1 sales.

The association also cautions that affordability is the single factor responsible for this high performance. Recurring price increases throughout the year since the GST 2.0 bonanza, and the possibility of even more coming up, could threaten that.

In a statement, FADA President Sai Giridhar said: “September ’26 was the best-ever September in Indian auto retail… I would, however, urge that this headline be read with discipline: the 31.82 percent is the most base-distorted print of the year”. He further clarified: “It was the best-ever September across five of our six categories and, with it, the best-ever first half of any financial year at 1,55,12,319 units (+20.77 percent); retail rose 4.69 percent over August; and even setting the distorted September aside, FY’27’s first five months grew about 17 percent, which is the truer underlying run-rate.”

Breaking down the total, bikes and scooter sales grew 33.08 percent YoY at 17,90,188 units, which is 15 percent higher than the previous peak in 2018. Passenger vehicles increased by 32.10 percent at 4,27,213 units. This was the first-ever September with over one lakh commercial vehicle sales, at 1,03,557 units, or up 37.62 percent. A further 1,32,570 three-wheelers were sold, growing 22.25 percent, of which approximately 65 percent were electric. Tractor sales grew 13.75 YoY percent but actually fell MoM due to an inconsistent monsoon and late festival dates this year. Wheeled construction equipment rose 38.00 percent to 6,486 units.

Interestingly, petrol vehicles reclaimed a lead over alternative fuels. Last month’s big headline was that sales of electric, hybrid and CNG vehicles combined overtook petrol for the first time ever. While that has now flipped back very slightly in petrol’s favour at 41.27 percent vs 41 percent, the tiny margin suggests that this might just be a period of equalisation, with alternative fuels still gaining momentum before settling into a long-term pattern.

Total electric vehicle sales hit an all-time monthly high, at 3.34 lakh units. EV penetration now stands at 13 percent.

As for market share, Honda Motorcycle and Scooter India topped the bike sales charts at 4,68,789 units (26.19 percent), with Hero MotoCorp very close behind at 4,34,280 units (24.26 percent) and TVS Motor Company in third place at 3,64,640 units (20.37 percent). Expectedly, Maruti Suzuki India continues to dominate the passenger vehicle segment with 1,69,132 sales (39.59 percent), with Mahindra & Mahindra at 57,343 (13.42 percent) and Tata Motors at 57,254 (13.40 percent); far behind but growing rapidly.