Auto Retail Sales Surge to Record February Levels, Led by Two-Wheelers and Tractors

Automobile retail sales in India rose sharply in February, registering their best-ever performance for the month as strong rural demand, improved affordability and continued momentum following GST reform supported broad-based growth across vehicle categories, according to data released by the Federation of Automobile Dealers Associations.

Total vehicle retail sales stood at 2.41 million units in February 2026, marking a 25.62% year-on-year increase. The performance marked record February sales across major segments including two-wheelers, passenger vehicles, commercial vehicles, three-wheelers and tractors.

Two-wheelers continued to dominate the market, with retail sales rising 25.02% year-on-year to 1.7 million units. Growth was broad-based across geographies, with urban sales rising 28.96% and rural demand increasing 22.16%, reflecting improving consumer confidence and mobility demand.

Passenger vehicle retail sales also remained strong, increasing 26.12% year-on-year to 394,768 units. Rural demand significantly outpaced urban markets, growing 34.21% compared with 21.12% in urban areas, supported by improving rural income conditions and the continuing popularity of SUVs. Recovery in smaller cars also contributed to the segment’s growth.

Commercial vehicles recorded one of the strongest expansions among major segments. Retail sales rose 28.89% year-on-year to 100,820 units, aided by healthy freight movement, expanding e-commerce activity and infrastructure-led demand.

Three-wheeler sales climbed 24.39% to 117,130 units, reflecting strong demand in urban mobility and last-mile connectivity services.

Tractors emerged as the fastest-growing category in February, with registrations jumping 36.35% year-on-year to 89,418 units. The strong performance highlighted robust rural sentiment supported by favourable agricultural conditions and improved cash flows in the countryside.

However, the construction equipment segment saw a marginal decline, with sales falling 1.22% year-on-year to 6,721 units.

Dealer inventory levels also showed improvement, particularly in the passenger vehicle segment. Inventory declined to 27–29 days, moving closer to FADA’s recommended 21-day benchmark, suggesting healthier alignment between wholesale dispatches from manufacturers and retail sales.

Looking ahead, dealer sentiment remains broadly positive though slightly more measured. For March 2026, about 75.51% of dealers expect growth, while only 4.59% anticipate a decline, supported by festival demand and financial year-end buying.

For the March–May quarter, 67.35% of dealers expect sales growth, though expectations have moderated slightly compared with earlier surveys.

According to FADA, the market appears to be transitioning from a sharp rebound phase to a more stable and sustainable growth trajectory, with overall sentiment remaining cautiously optimistic.