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Retail auto sales surge 17.6% in January 2026 as GST cheer sustains
Auto sales in January 2026: While two-wheeler sales rose 20.82% YoY to 18,52,870 units, car sales increased 7.22% YoY to 5,13,475 units, according to FADA data.
Auto sales in January 2026 were at their highest since the festive season last year as the momentum brought on by GST rationalisation sustained for vehicles of all shapes and sizes.
A total of 27,22,558 vehicles were registered on the government's VAHAN portal last month — up 17.61% over the year-ago period, according to data compiled by the Federation of Automobile Dealers Associations. While the two-wheeler sales rose 20.82% year-on-year to 18,52,870 units, car sales increased 7.22% year-on-year to 5,13,475 units.
Auto sales in January 2026: A snapshot
- 2W sales up 20.82% YoY at 18,52,870 units
- 3W sales up 18.80% YoY at 1,27,134 units
- Car sales up 7.22% YoY at 5,13,475 units
- CV sales up 15.07% YoY at 1,07,486 units
- Tractor sales up 22.89% YoY at 1,14,759 units
The GST momentum was supported by rural demand, especially due to harvest festivals of Pongal and Makar Sankranti as well as the ongoing wedding season. The demand comes with its own set of challenges, however, that of supply as well as discounting and high base-effect in some segments.
On 22 September, the government cut GST rates on soaps to small cars as part of a rationalisation move to reduce the number of tax slabs to two (5% and 18%) as against four (5%, 12%, 18% and 28%) earlier. A new GST rate of 40% was brought in for so-called sin goods like tobacco products, sports utility vehicles and luxury items. The new GST rates across vehicle types is as under:
| Vehicle Type | Criteria / Specifications | Total GST Rate |
|---|---|---|
| Electric Vehicles (EVs) | All fully electric cars, two-wheelers, and three-wheelers | 5% |
| Small Petrol Cars | Engine ≤ 1200 cc AND Length ≤ 4000 mm | 18% |
| Small Diesel Cars | Engine ≤ 1500 cc AND Length ≤ 4000 mm | 18% |
| Two-Wheelers | Engine capacity up to 350 cc | 18% |
| Three-Wheelers | Conventional (Petrol/Diesel/CNG) autorickshaws | 18% |
| Commercial Vehicles | Trucks, Lorries, and Buses (10+ passengers) | 18% |
| Essential Services | Ambulances | 18% |
| Mid-size & Luxury Cars | Engine > 1200 cc (P)/1500 cc (D) OR Length > 4000 mm | 40% |
| SUVs | Length > 4 m, Engine > 1500 cc, Ground Clearance ≥ 170 mm | 40% |
| Premium Motorcycles | Engine capacity > 350 cc | 40% |
| Hybrid Vehicles | Standard hybrids (taxed based on engine/size limits) | 18% or 40% |
FADA expects the sales momentum to sustain at least till the end of the fiscal, on the back of a growth-oriented budget and interest rate stability and, of course, the GST rate cut.
“On-ground feedback (at the dealership level) points to stronger inquiry, tighter follow-ups, with local marketing translating into higher conversion (to sales),” FADA President C.S. Vigneshwar said in a statement. “The key watchouts are election-related disruptions in select states, seasonality and model availability in select pockets.”
