Auto Sector Gains Momentum: Vehicle Retail Sales Cross 2.7 Million Units in January

India’s automobile sector witnessed strong growth in January, with retail vehicle sales rising sharply on a year-on-year basis. Improved rural cash flows, festive and wedding-season demand, and steady commercial vehicle activity helped push overall sales past the 2.7 million mark, according to data released by the Federation of Automobile Dealers Associations (FADA).

Vehicle Retail Sales Rise Nearly 18% in January

Vehicle retail sales in India increased by nearly 18 percent year-on-year in January, crossing 2.7 million units. The surge was driven by improved liquidity in rural areas due to crop cycles and weddings, sustained demand in the freight segment, and momentum created after changes in the Goods and Services Tax (GST), according to vehicle dealers’ body FADA.

Over 2.72 Million Vehicles Sold in January

As per the report, total retail sales across the auto sector stood at 27,22,558 units in January, compared to 23,14,940 units in January 2025, marking a 17.61 percent increase.

Retail sales of passenger vehicles reached 5,13,475 units, up from 4,78,915 units in the same period last year, reflecting a 7 percent annual growth.

Rural India Drives Passenger Vehicle Demand

FADA President C. S. Vigneshwar said,

"The growth story in vehicle sales is being written in rural India rather than metropolitan cities. Passenger vehicle sales in rural areas grew by 14.43 percent year-on-year, significantly higher than the 2.75 percent growth seen in urban markets."

He added,

"This confirms the structural expansion of passenger vehicle demand beyond top cities, supported by strong preference for SUVs and compact SUVs, the return of small cars, improved product availability, and continued support through attractive schemes."

Two-Wheeler Retail Sales Jump 21%

Retail sales of two-wheelers rose sharply by 21 percent year-on-year in January to 18,52,870 units.

Commenting on the trend, Vigneshwar said,

"Sales remained strong in rural areas due to Pongal and Makar Sankranti festivities, wedding-related mobility, and improved affordability. Urban markets are also showing clear improvement, indicating demand normalisation beyond festive buying."

Growth in Three-Wheelers and Commercial Vehicles

Retail sales of three-wheelers and commercial vehicles also recorded healthy growth in January, rising by 19 percent and 15 percent, respectively.

Meanwhile, tractor registrations increased 23 percent year-on-year to 1,14,759 units, reflecting sustained momentum in the agricultural economy.

Dealer Confidence Remains Strong

Looking ahead to the next three months, FADA said dealer confidence remains robust.

• 79.70 percent of participants expect growth

• Only 1.88 percent foresee a decline

According to FADA, the near-term macroeconomic environment remains supportive. A growth-oriented Union Budget focused on infrastructure and agriculture, policy continuity after GST changes, and interest rate stability following easing in 2025 are collectively improving affordability, financing availability, and consumer purchase intent.