Auto Retail Grows 17.6 percent in Jan 2026: 2Ws, 3Ws, Tractors Give Boost

India’s automobile retail market began calendar year 2026 on a strong footing, with vehicle retail volumes posting broad-based growth across most segments. According to data released by the Federation of Automobile Dealers Associations (FADA), total vehicle retail sales stood at 27,22,558 units in January 2026, marking a year-on-year (YoY) growth of 17.61 percent. 

The performance was underpinned by resilient rural demand, improving affordability, and sustained momentum across mobility and freight-linked categories. Sales were boosted by two-wheeler, three-wheeler and tractor segments, recording YoY growths of 20.82 percent, 18.80 percent, and 228.89 percent, respectively.

January’s growth reflected a healthy demand environment following post-GST adjustments, supported by strong rural cash flows from the harvest season and wedding-related purchases. Dealer feedback indicated improved enquiry levels, faster digital follow-ups, and a visible shift towards higher-value products across segments. While some categories faced selective supply constraints and competitive discounting pressures, overall retail sentiment remained positive.

Two-Wheelers Lead Growth with Urban Revival

Two-wheelers emerged as the strongest contributor to January retail volumes, with sales of 18,52,870 units, translating into a 20.82 percent YoY increase. Rural markets continued to anchor demand, accounting for around 56 percent of volumes, supported by festival footfalls such as Pongal and Makar Sankranti, along with improved affordability.

Notably, urban markets also showed a clear revival, with urban two-wheeler sales growing faster than rural volumes. This points to demand normalisation beyond festive-led buying and reflects a gradual recovery in everyday commuting and discretionary purchases. Dealers also highlighted increasing customer preference for mid-powered motorcycles and higher-value models, although model-wise supply tightness remained a constraint in some pockets.

PVs See Non-Metro Growth Outpacing Urban Markets

Passenger vehicle (PV) retail stood at 5,13,475 units in January, registering a 7.22 percent YoY growth. While the segment remained urban-led, with nearly 59 percent of volumes coming from cities, growth momentum was increasingly driven by non-metro and rural markets. Rural PV sales grew by over 14 percent YoY, significantly outperforming urban growth, underscoring the structural expansion of PV demand beyond top-tier cities.

SUVs and compact SUVs continued to dominate customer preference, aided by improved product availability, the revival of entry-level models, and ongoing promotional schemes. Importantly, inventory levels softened to a healthier range of 32–34 days, indicating improved channel discipline and better working capital efficiency across dealerships.

CVs Gain from Freight and Infrastructure Activity

Commercial vehicle retail sales rose to 1,07,486 units in January, reflecting a 15.07 percent YoY growth. The recovery was driven by improving freight sentiment, replacement-led buying, and steady infrastructure activity. Growth was balanced across tonnage categories, with both light and heavy commercial vehicles recording double-digit gains.

Geographically, demand participation was visible across both rural and urban regions, highlighting that logistics-led growth is no longer limited to metros. Dealer feedback pointed to renewed confidence among single-owner operators and steady goods movement supporting volumes.

Tractors and Three-Wheelers Remain Resilient

Tractor sales posted a strong 22.89 percent YoY growth at 1,14,759 units, reflecting healthy farm incomes and continued rural liquidity. Seasonal factors, coupled with expectations of stable agricultural output, supported demand during the month. Three-wheeler retail volumes stood at 1,27,134 units, growing 18.80 percent YoY. The segment continued to see high penetration of electric powertrains, particularly in passenger and goods applications, reinforcing the shift towards cost-efficient last-mile mobility solutions.

Construction Equipment Faces High-Base Pressure

Construction equipment remained the only major segment under pressure, with retail declining 21.09 percent YoY. FADA attributed the decline largely to a high base effect and segment-specific recalibration, despite ongoing infrastructure activity. Dealers indicated that demand normalisation is underway, even as medium-term fundamentals remain intact.

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Looking ahead, dealer sentiment remains constructive. For February 2026, over 70 percent of dealers expect growth, supported by a growth-oriented Union Budget, infrastructure and agriculture focus, stable interest rates, and continued wedding-season demand. Over the next three months, nearly 80 percent of dealers anticipate growth, suggesting sustained momentum across segments, led by rural demand, improving affordability, and a steady booking pipeline.