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Vehicle retail sales in India rose 25.89 per cent year-on-year to an all-time high for the month of July at 25.91 lakh units, driven by broad-based growth across all major vehicle categories, according to data released by the Federation of Automobile Dealers Associations (FADA) on Thursday.

On a sequential basis, however, total retail sales were largely flat, slipping 0.16 per cent from June, reflecting the impact of heavy monsoon rains and the traditionally subdued Aadi and Shravan period in parts of the country.

Segment-wise Performance

Two-wheeler retail sales, the largest segment, stood at 18.18 lakh units in July, up 28.25 per cent year-on-year but down 1.26 per cent month-on-month. Passenger vehicle (PV) retail sales rose 19.13 per cent from a year earlier to 4.16 lakh units, though they declined 1.68 per cent from June. Three-wheeler sales increased 16.16 per cent year-on-year and 6.89 per cent month-on-month to 1.33 lakh units, while commercial vehicle sales grew 24.04 per cent year-on-year to 99,666 units.

Commenting on the performance, FADA Vice President Sai Giridhar said, "July'26 has etched itself into Indian Auto Retail history - for the first time on record, every single category posted its best-ever July."

"The industry retailed 25,91,138 units, up 25.89% YoY - the strongest July growth in the series outside Covid-distorted base years - while holding almost flat (-0.16%) over a strong June," he added.

Sales Drivers and Market Trends

Key Growth Drivers

According to FADA, improved affordability following GST 2.0, easier retail finance, favourable festival timing and a low base from July last year supported the strong year-on-year growth, while heavy rainfall and flooding weighed on month-on-month demand.

Rise of Alternative-Fuel Vehicles

The association also highlighted a significant shift in the passenger vehicle market, with alternative-fuel vehicles (CNG, hybrid and electric) accounting for 40.59 per cent of retail sales, just 1.09 percentage points behind petrol-powered vehicles at 41.68 per cent. The gap was 13.21 percentage points a year earlier.

Inventory Concerns and Future Outlook

Passenger Vehicle Inventory

FADA, however, flagged rising passenger vehicle inventory as an area of concern. Inventory levels increased to 33-35 days at the end of July, well above the association's recommended benchmark of 21 days, and urged original equipment manufacturers (OEMs) to align dispatches more closely with retail demand as festive stocking begins.

Positive Dealer Sentiment

Looking ahead, dealer sentiment remained upbeat. Around 74.3 per cent of dealers expect sales growth in August, while 87.85 per cent foresee growth over the August-October festive period, supported by festival demand, recovering rural cash flows and a favourable base effect. (ANI)