India Auto Retail Sales Rise 18% YoY in January 2026: Two-Wheeler Demand Leads Growth

India’s automobile retail market kicked off 2026 with a decisive show of strength. Retail vehicle sales in January 2026 surged nearly 18% year-on-year to 27.23 lakh units, according to data released by the Federation of Automobile Dealers Associations (FADA) on February 10.

The headline number tells a clear story: demand is broad-based, confidence is returning, and two-wheelers are once again anchoring India’s consumption recovery.

A Strong Start to the Year

Total retail sales stood at 27,22,558 units, marking a 17.61% jump over January 2025 and a sharp 34% rise over December 2025. This sequential spike underlines both seasonal momentum and improving ground-level sentiment.

FADA attributed the strong performance to a mix of structural and cyclical factors:

• Post-GST demand normalisation
• Healthy rural cash flows supported by harvest income
• Wedding-season spending
• Sustained freight movement aiding commercial vehicles

Together, these drivers helped auto retail shrug off concerns around interest rates and urban cost pressures.

Two-Wheelers: The Backbone of the Rally

Two-wheelers were the undisputed stars of January.

Retail sales touched 18.53 lakh units, clocking 21% year-on-year growth. Importantly, this wasn’t a one-pocket story.

Rural markets accounted for 56% of two-wheeler sales, reflecting steady income visibility in agrarian regions.

Urban demand also showed signs of revival, pointing to normalisation after a patchy 2024–25 phase.

At the brand level, Hero MotoCorp and Honda were locked in a tight battle, each clocking sales of around 5.2 lakh units, reinforcing how competitive the mass two-wheeler segment remains.

Passenger Vehicles: Steady, Not Spectacular

Passenger vehicle (PV) retail sales rose a more modest 7% YoY to 5.13 lakh units, but the quality of demand improved.

Urban markets contributed 59% of PV sales, keeping cities at the center of car consumption.

At the same time, entry-level cars and compact SUVs saw renewed traction in rural India, a notable shift after several quarters of softness.

Inventory levels also improved meaningfully. Dealer stock eased to 32–34 days, reducing working-capital stress and improving dealer profitability—a quiet but crucial positive.

Market leadership remained unchanged, with Maruti Suzuki commanding roughly 42% market share, followed by Hyundai and Tata Motors.

Commercial Vehicles and Three-Wheelers: Freight Holds Firm

While exact volumes were not disclosed, both segments delivered healthy growth:

• Three-wheelers grew 19% YoY, supported by last-mile mobility and urban logistics.
• Commercial vehicle sales rose 15% YoY, reflecting steady freight demand and infrastructure-linked activity.

This is an important signal. CV performance often mirrors real economic activity, and January’s numbers suggest underlying momentum remains intact.

Rural vs Urban: A Rare Sweet Spot

One of the most encouraging aspects of the January data is simultaneous strength across rural and urban markets.

• Rural two-wheeler sales grew nearly 20% YoY
• Urban auto sales expanded over 22% YoY, indicating demand normalization

This balance reduces the risk of a one-sided recovery and gives manufacturers and dealers better visibility into the February-March quarter.

What Lies Ahead for Auto Stocks and Demand?

FADA President C S Vigneshwar struck an optimistic note, highlighting expectations of continued momentum through February and March, supported by festival demand, marriage season tailwinds, and stable financing conditions.

For markets, the January data reinforces three key takeaways:

• Two-wheelers remain the cleanest rural demand proxy
• Dealer health is improving, thanks to lower inventory stress
• Freight and mobility demand remain resilient, cushioning downside risks

If macro conditions remain stable, FY26 could mark a more normalized growth year for India’s auto sector, after the volatility of the past few years.

January 2026 wasn’t just a strong month; it was a confidence signal. With rural demand holding firm, urban markets reviving, and dealer balance sheets improving, India’s auto retail engine has started the year in the fast lane.