India's passenger vehicle (PV) market recorded a notable fuel shift in August 2026 as compressed natural gas (CNG), liquefied petroleum gas (LPG), hybrid vehicles and electric vehicle (EV) registrations together exceeded petrol and ethanol registrations, according to data from the Federation of Automobile Dealers Associations. The combined share of the three alternative fuel categories reached 41.95 per cent, edging past petrol and ethanol at 40.85 per cent, while petrol remained the largest individual fuel category.

The breakdown showed CNG and LPG together accounted for 25.28 per cent of PV retail in August, hybrids had a share of nine point zero four per cent and EVs accounted for seven point six three per cent, with diesel making up the remaining 17.21 per cent. The change followed a rapid shift from August 2025 when alternative fuels held 35.26 per cent against petrol and ethanol at 46.37 per cent, a gap of 11.11 percentage points. By July 2026 the margin had narrowed and in August alternative fuels moved ahead by one point one zero percentage points.

FADA analysis attributed most of the year-on-year change to the rise in CNG and LPG, with that category increasing by three point eight one percentage points, while EV share rose by one point eight zero percentage points and hybrids grew by one point zero eight percentage points; petrol and ethanol share declined by five point five two percentage points. FADA leadership described the outcome as the first time alternative fuels combined had overtaken petrol in the PV market and noted dealers pointed to lower running costs and consumer concern over the transition to E20 petrol as factors.

The fuel shift occurred amid a record month for PV retail, which rose 16.14 per cent year-on-year to 0.402 million (mn) units, the first time August registrations crossed that level. Rural registrations led growth with 24.99 per cent year-on-year expansion while urban retail rose 10.93 per cent. Across vehicle categories total retail rose 17.51 per cent to 2.423 mn units. PV inventory increased to around 38-40 days, above FADA's recommended 21 days, with 56 per cent of dealers reporting higher stock and 67.09 per cent expecting retail growth in September as dealers prepare for the festive season.