India’s automobile industry registered a six percent growth in overall sales for FY25, with dealers showing cautious optimism for FY26, according to the Federation of Automobile Dealers Associations (FADA). The total vehicle retail sales reached over 29.8 million units, up from 28.1 million units in FY24. Growth was led primarily by the two-wheeler and passenger vehicle segments, driven by increased demand, product launches, and improved rural sentiments.

The passenger vehicle segment grew eight percent, though high inventory levels remain a concern. Two-wheeler sales went up by nine percent boosted by improved financing options and rising rural demand. Commercial vehicle sales, however, remained nearly flat, affected by reduced government infrastructure spending and financing challenges. Electric vehicle adoption showed promise, but growth was slower than expected due to high initial costs and limited charging infrastructure.

FADA cautioned that FY26 could be affected by factors like weather patterns, fuel prices, and election-related volatility. While dealers remain hopeful, they have adopted a more measured approach to inventory and expansion planning. FADA also urged OEMs to manage supply efficiently to avoid overstocking and maintain profitability at the dealer level.