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The fuel price hikes in May saw a noticeable shift in consumer interest towards fuel-efficient and alternative-powertrain vehicles, with dealers reporting a surge in enquiries for such models and electric two-wheeler penetration rising to 9.25 per cent from 6.11 per cent a year ago, FADA said on Monday.

According to the Federation of Automobile Dealers Associations (FADA), India's overall automobile retail sales climbed 9.55 per cent year-on-year to a record 25.31 lakh units.

"A notable feature of the month was the consumer response to the May fuel-price revision: dealers reported a visible rise in enquiries for fuel-efficient and alternative-powertrain options, reflected in the 2W EV share climbing to 9.25 per cent from 6.11 per cent a year ago," FADA stated.

Looking at the June to August period, dealer confidence looks firm, with 59.07 per cent now expecting growth -- a meaningful improvement that signals greater conviction in the medium-term demand pulse as the monsoon advances, according to FADA.

The firmer reading suggests dealers expect the seasonal lull to give way to a stronger rural income cycle once Kharif sowing gathers pace.

Total automobile retail sales in India grew by 9.55 per cent with a record 25,31,067 units in May as compared to 23,10,451 units in the same month last year, despite fuel-price revision, heatwave conditions and the West Asia conflict, FADA said.

The retail sales performance reflects an all-time best May for three-wheelers, passenger vehicles and tractors -- a strong outcome for what is seasonally a lean month.

According to data released by FADA, passenger vehicles (PV) retail sales were at a record 4,02,591 units last month as compared to 3,26,656 units in May 2025, a growth of 23.25 per cent.

Two-wheelers also clocked best-ever monthly numbers at 18,44,947 units in May this year as compared to 17,15,581 units in the same month a year ago, at a growth of 7.54 per cent.

FADA further said three-wheeler sales stood at 1,11,526 units last month as compared to 1,07,688 units in May 2025, up 3.56 per cent.

Commercial vehicles also witnessed a growth of 5.29 per cent at a record 83,823 units last month as compared to 79,614 units in May 2025, it added.

For two-wheelers, support is expected from improving rural sentiment, healthy agri cash flows through the sowing season and the continued migration towards fuel-efficient and alternative-powertrain models, the Association said.

In passenger vehicles, the period is likely to remain steady ahead of the festive build-up, aided by new product introductions and a broadening Bharat demand base.

For commercial vehicles, sentiment remains constructive on economic activity, goods movement and infrastructure-linked demand, although financing turnaround time and the West Asia situation remain key monitorables.

"Overall, the next three months appear to be Cautiously Optimistic -- with a tad below normal monsoon, the firm 7.7 per cent FY26 GDP print and broad policy continuity providing a supportive backdrop, the industry looks set to move from a seasonally soft patch towards a firmer second-quarter footing," FADA said.

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