‘FADA says multi-fuel strategy is crucial for India’s auto growth’: CS Vigneshwar, President of Federation of Automobile Dealers Associations

Q: How does FADA view the Delhi EV Policy that has been approved? Do you believe it will accelerate EV adoption in the capital?

A: FADA welcomes it, and believes it is one of the most significant policy interventions in urban mobility in recent years. It provides long-term certainty to the industry through a comprehensive framework comprising purchase incentives, scrappage support, charging infrastructure expansion, and a clear transition roadmap till 2030. Such policy certainty is critical because it enables manufacturers, dealers, and investors to plan capacity, capital allocation, and infrastructure investments with greater confidence.

We believe it will accelerate EV adoption in the capital. But the pace of adoption will depend on how effectively the ecosystem scales alongside the policy. Delhi currently retails nearly 50,000 two-wheelers and 5,000 three-wheelers every month. As the EV-only registration timelines come into effect, this demand will progressively shift towards electric mobility. Today, India retails around 170,000 electric two-wheelers and 70,000 electric three-wheelers every month. This means Delhi alone could account for nearly 30% of today’s national electric two-wheeler retail volumes, and 7% of electric three-wheeler volumes.

These numbers underline the importance of timely production ramp-up, product availability, and Delhi-specific allocation by OEMs. Equally important will be charging infrastructure, financing, after-sales capability, and consumer confidence. FADA is committed to supporting this transition and has offered to facilitate around 150 public charging stations through its dealer network.

Q: The government is pushing technologies such as E20 and flex-fuels as part of its multi-tech mobility strategy. Are these technologies generating genuine customer interest, or is there still apprehension in the market?

A: India’s mobility future will not be single-fuel – it will be multi-fuel, and we see that as a strength, not a compromise. FADA has backed a technology-neutral, customer-led transition, and both E20 and flex-fuel sit squarely within that philosophy.

On the ground, our dealers see a clear pattern. Where the customer benefit is immediate and visible – CNG, strong hybrids, EVs – traction is strong. E20 and flex-fuel are at an earlier point on that curve. Every new petrol vehicle sold in India since April 2023 is already E20-compliant, so at the new-car counter this is largely a settled matter. The genuine conversations happen around three things: mileage, the older vehicle already in the household, and fuel availability.

We would be doing the customer a disservice if we glossed over these. On fuel efficiency, the real-world impact on modern engines is modest, and higher-octane ethanol blends bring their own drivability gains, but customers deserve that explained honestly, not defensively. For pre-2023 vehicles, the concern is limited to a small set of components and is inexpensively addressed during routine service; here, the dealer’s after-sales counter is the single most credible source of reassurance a customer has. As E85 pumps scale from a few dozen today towards a wider network over the next two years, flex-fuel will move from prototype to genuine consumer choice.

Q: Recent FADA retail data shows that rural markets and small towns are driving volume growth. As far as passenger vehicles are concerned, are first-time buyers in such markets showing a preference for specific segments or body types? Are they as open to flex-fuels and EVs as their urban counterparts? Is the hatchback still in demand in rural areas, or is it losing out to small SUVs?

A: Bharat is no longer the follower in this story. In May 2026, rural passenger vehicle retails grew over 30% year-on-year, against roughly 19% in urban markets. The growth engine has shifted, and it is our dealers across tier-2, tier-3, and rural India who are capturing it.

On body type, we see two currents. The affordable hatchback and entry car are reviving, led by first-time buyers for whom the car is a real step-up in household mobility. At the same time, the compact SUV has become the default aspiration – higher ground clearance for genuine road conditions, a sense of safety, and stronger presence. For many rural first-time buyers, the choice is not hatchback versus sedan; it is a well-specified hatchback versus a compact SUV. The traditional sedan has quietly ceded that ground.

On fuel choice, the rural customer is refreshingly clear-eyed. The decision is made on running cost and confidence, not on headlines. Fuel-efficient petrol and CNG remain the mainstay because the arithmetic works and the refuelling network exists. Interest in EVs is rising, but adoption trails the cities, because charging access, range assurance, and resale confidence need to mature in smaller towns. Awareness of E20 and flex-fuel is improving, too, though here again the customer wants clarity before commitment.

Q: FADA has maintained that while there is a wholesale push by OEMs, dealers continue to face structural headwinds from multiple financial angles, including capital lock-ups. How are current inventory levels, and are they deviating from FADA’s recommended 21-day safety benchmark?

A: Inventory discipline is the single most important financial-health issue for our members, and we track it every month for exactly that reason. As per our May 2026 data, passenger vehicle inventory has moved up to around 30 days – clearly above FADA’s recommended 21-day benchmark, and higher than the preceding month. That is why, in May, we publicly urged PV OEMs to keep dispatches disciplined through the seasonally softer June window.

This is nowhere near the 50-plus-day overhang the channel has endured in tougher cycles, so the situation is manageable. But the direction matters. Every additional day of stock is dealer capital locked on the yard, financed at interest, and it converts into discounting pressure as the festive season approaches. When a dealer’s balance sheet is stressed, it is ultimately the customer’s experience (service investment, staffing, response time) that pays the price.

FADA’s position has been simple: dispatches must follow retail, not the other way around. Wholesale billing should mirror genuine, demand-backed retail rather than quarter-end or production targets. This is not an adversarial ask – a financially healthy dealer network is the OEM’s own most durable distribution asset, and the customer’s most reliable point of trust. Enter the festive season with stock aligned to demand, and the entire chain – OEM, dealer, and customer – wins.

Q: As we head into the festive season, how are you reading the demand momentum for the rest of 2026, for two-wheelers and passenger vehicles?

A: Our read for the festive season is one of grounded optimism – confident, but not complacent. Dealer sentiment reflects this: for the June-August window, close to 60% of our members expect growth, a clear firming from the near-term reading.

The tailwinds are genuine. The monsoon, though late, has set in, and as Kharif sowing gathers pace, rural cash flows should strengthen. Financing is stable after RBI held the repo rate at 5.25%, GST 2.0 has improved affordability at the entry level, a firm FY26 GDP print near 7.7% anchors confidence, and the marriage-season and festive booking pipeline is healthy. For two-wheelers, the rural income cycle and the sharp shift towards fuel-efficient and electric options are the key supports. For passenger vehicles, new launches and the enduring pull of SUVs should carry momentum into the festival months.