Alternative-fuel vehicles have overtaken petrol-powered models in the passenger vehicle (PV) retail market for the first time, signalling a broadening shift in consumer preferences even as the segment posted its strongest August on record.
CNG/LPG, hybrids and electric vehicles together accounted for 41.95% of PV retail sales in August, against 40.85% for petrol/ethanol. CNG/LPG was the largest contributor to the alternative-fuel mix at 25.28%, followed by hybrids at 9.04% and electric vehicles at 7.63%. Diesel accounted for 17.21%. Petrol/ethanol, however, remained the largest individual fuel category, according to data released by the Federation of Automobile Dealers Associations (FADA) on Monday.
The crossover came as PV retail rose 16.14% year-on-year (YoY) to 402,398 units, the first time August sales crossed 400,000 units. Sales, however, declined 3.4% from July’s record 416,555 units. FADA said the shift towards alternative powertrains was being driven by running-cost economics, consumer concerns around the E20 transition and the increasing availability of CNG, hybrid and EV models.
“This change in fuel mix is mainly due to geopolitical issues, and it is expected to continue. CNG percentage is also very high, making it the large contributor, more than diesel. Acceptability of CNG will continue to grow and will push the mix. OEMs are also pushing for more CNG models,” Amar Jatin Seth, vice-president, FADA, told Fe.
The fuel shift is taking place alongside a significant broadening of demand beyond urban markets. Rural PV retail grew 24.99% YoY in August, more than twice the 10.93% growth in urban markets. Rural demand also outpaced urban growth across two-wheelers, commercial vehicles and three-wheelers.
Seth said the strength in rural demand was not merely temporary, pointing to additional income avenues, higher spending and government schemes supporting rural incomes.
The broader auto market grew 17.51% YoY to 2.42 million units in August, its biggest-ever August. Two-wheeler retail rose 19.69% to 1.71 million units, with EV penetration rising to 10.68% from 7.66% a year earlier. Commercial vehicle retail increased 14.45% to 90,769 units.
Seth expects PV sales to grow 15-20% over the next three months, supported by the festive season, new launches, bookings and rural demand. Half-year financial closure in September could also support retail.
However, the industry enters the festive period with elevated inventory. PV stock at dealerships has risen to around 38-40 days, against FADA’s recommended 21 days, raising concerns over dealer working capital and potential discounting if demand does not keep pace.
Seth said dealers were uncomfortable with the high inventory but expected it to ease after the festive season. He also cautioned that the strong YoY growth would moderate as the GST 2.0-related base effect fades. FADA expects the real test of demand to come through showroom conversions during September-November rather than headline YoY growth.