Car retail sales hit record July high; alternative fuels close in on petrol

Rural markets continued to outperform urban centres, with passenger vehicle sales growing 24.72 per cent compared with 15.76 per cent in cities, underscoring the broad-based nature of the recovery.

A key trend during the month was the rapid shift towards alternative fuels. CNG, hybrid and electric vehicles together accounted for 40.59 per cent of passenger vehicle registrations, almost matching petrol’s 41.68 per cent share. The gap has narrowed dramatically from 13.21 percentage points a year ago.

Total EV registrations across all categories touched a record 3,27,901 units, taking EV penetration to nearly 12.7 per cent from 9.6 per cent a year earlier. Despite the robust retail performance, passenger vehicle inventory rose to 33-35 days, well above FADA’s recommended 21-day benchmark. The dealers’ body urged manufacturers to align wholesale dispatches with retail demand to prevent inventory accumulation as festive stocking gathers pace.

FADA Vice-President Sai Giridhar said, “The strong momentum is being supported by low borrowing costs, GST 2.0, income tax relief and improving rural demand. While input costs, exchange rate volatility and multiple price hikes have pushed up vehicle prices, the market has largely absorbed the increases, particularly in rural areas where demand has been stronger than urban markets.” He added that, “buyers are also delaying purchase decisions in anticipation of the large number of festive-season launches before finalising their purchases.”

Two-wheeler retail sales climbed 28.25 per cent year-on-year to a record 18,18,289 units, although they slipped 1.26 per cent sequentially due to heavy rains and the Aadi-Shravan period impacting rural markets. Rural sales grew 28.59 per cent, marginally ahead of the 27.86 per cent rise in urban markets, while electric two-wheelers accounted for a record 11.24 per cent of registrations.

Three-wheeler sales rose 16.16 per cent year-on-year and 6.89 per cent month-on-month to a record 1,33,778 units. Rural demand again led the growth, while electric models accounted for 65.08 per cent of total registrations.

Tractor sales also recorded their best-ever July, rising 28.10 per cent year-on-year and 12.10 per cent sequentially to 1,17,349 units, driven by catch-up Kharif sowing, improving rural cash flows and expectations of a normal monsoon despite its delayed onset.

Overall automobile retail sales across all categories rose 25.89 per cent year-on-year to 25,91,138 units, making July the first month in which all six vehicle segments posted their highest-ever July volumes.

Looking ahead, FADA’s dealer survey showed 74.3 per cent expect growth in August, while 87.85 per cent remain optimistic for the August-October festive quarter, supported by Independence Day launches, Onam, Raksha Bandhan and strengthening rural incomes.