Car sales rev up 26% in February, buoyed by 34% jump in rural market: FADA
Electric vehicle penetration remained below the 4% mark, even as compressed natural gas (CNG) powered cars accounted for a higher share of new car sales
- Mar 5, 2026,
- Updated Mar 5, 2026 11:14 AM IST
Retail sales of passenger vehicles continued to grow in double digits in February, aided by tailwinds from the Goods and Services Tax (GST) rate cut on internal-combustion engine (ICE) vehicles.
Passenger vehicle retails in February stood at 394,768 units, registering a strong 26.12% growth, according to the Federation of Automobile Dealers Associations (FADA).
The momentum remained broad-based with urban markets growing 21.12% year-over-year while rural markets surged 34.21%, indicating a strong continued demand beyond metros, the dealers’ association said.
“The sharper rural growth is particularly encouraging as it is supporting the sale of small cars, even as SUVs and utility vehicles continue to drive overall volumes,” FADA President C S Vigneshwar said.
Improved affordability following GST rate rationalisation, the marriage season and healthy bookings supported by new model introductions also aided demand during the month, Vigneshwar added.
Inventory levels of passenger vehicles have reduced by about five days and now stand at a healthy 27–29 days, as per FADA data.
However, despite a bevy of electric car launches, EV penetration remained below the 4% mark in February at 3.48% even as compressed natural gas (CNG) powered cars accounted for a higher share of new car sales. To be sure, EV penetration slipped below the 4% mark after the GST rate cut made ICE vehicles more affordable.
Meanwhile, CNG penetration in passenger vehicles increased to 23.45% in February from 20.38% in the same month last year. On March 1, Maruti Suzuki said its CNG penetration was close to 44% in February. In the first 11 months of FY26, the CNG penetration of India’s biggest carmaker was around 40%.
For the Indian auto sector, February emerged as a landmark month. The growth was broad-based across almost all segments. On a yearly basis, two-wheelers grew by 25.02%, three-wheelers by 24.39%, passenger vehicles by 26.12%, and commercial vehicles by 28.89%, reflecting healthy demand across both personal mobility as well as economic activity-driven segments. Tractors continued their strong run with a sharp 36.35% growth, emerging as the fastest-growing category during the month.
“With this, five out of six categories—2W, 3W, PV, CV and Tractors—registered their highest-ever February retail volumes, clearly highlighting the strength of underlying demand in the market. The only segment which did not set a fresh February record was Construction Equipment, which saw a marginal decline of 1.22% YoY. Overall, the strong performance during the month indicates that the policy-led confidence in the market, particularly following GST 2.0, is now translating into sustained demand across multiple vehicle segments,” said the FADA president.
Two-wheeler retail sales continued their strong momentum in February, reaching 17,00,505 units, up 25.02%. Growth remained broad-based with urban markets rising 28.96% YoY and rural markets growing 22.16% YoY, showed the FADA data.
Retail sales of passenger vehicles continued to grow in double digits in February, aided by tailwinds from the Goods and Services Tax (GST) rate cut on internal-combustion engine (ICE) vehicles.
Passenger vehicle retails in February stood at 394,768 units, registering a strong 26.12% growth, according to the Federation of Automobile Dealers Associations (FADA).
The momentum remained broad-based with urban markets growing 21.12% year-over-year while rural markets surged 34.21%, indicating a strong continued demand beyond metros, the dealers’ association said.
“The sharper rural growth is particularly encouraging as it is supporting the sale of small cars, even as SUVs and utility vehicles continue to drive overall volumes,” FADA President C S Vigneshwar said.
Improved affordability following GST rate rationalisation, the marriage season and healthy bookings supported by new model introductions also aided demand during the month, Vigneshwar added.
Inventory levels of passenger vehicles have reduced by about five days and now stand at a healthy 27–29 days, as per FADA data.
However, despite a bevy of electric car launches, EV penetration remained below the 4% mark in February at 3.48% even as compressed natural gas (CNG) powered cars accounted for a higher share of new car sales. To be sure, EV penetration slipped below the 4% mark after the GST rate cut made ICE vehicles more affordable.
Meanwhile, CNG penetration in passenger vehicles increased to 23.45% in February from 20.38% in the same month last year. On March 1, Maruti Suzuki said its CNG penetration was close to 44% in February. In the first 11 months of FY26, the CNG penetration of India’s biggest carmaker was around 40%.
For the Indian auto sector, February emerged as a landmark month. The growth was broad-based across almost all segments. On a yearly basis, two-wheelers grew by 25.02%, three-wheelers by 24.39%, passenger vehicles by 26.12%, and commercial vehicles by 28.89%, reflecting healthy demand across both personal mobility as well as economic activity-driven segments. Tractors continued their strong run with a sharp 36.35% growth, emerging as the fastest-growing category during the month.
“With this, five out of six categories—2W, 3W, PV, CV and Tractors—registered their highest-ever February retail volumes, clearly highlighting the strength of underlying demand in the market. The only segment which did not set a fresh February record was Construction Equipment, which saw a marginal decline of 1.22% YoY. Overall, the strong performance during the month indicates that the policy-led confidence in the market, particularly following GST 2.0, is now translating into sustained demand across multiple vehicle segments,” said the FADA president.
Two-wheeler retail sales continued their strong momentum in February, reaching 17,00,505 units, up 25.02%. Growth remained broad-based with urban markets rising 28.96% YoY and rural markets growing 22.16% YoY, showed the FADA data.