FADA survey signals towards stronger festive quarter demand despite monsoon risks

India’s automobile retail industry is entering the second half of 2026 with improving dealer confidence, as stronger agricultural activity, normalising supplies and the upcoming festive period are expected to support demand. The latest Federation of Automobile Dealers Associations (FADA) survey shows sentiment strengthening for both July and the broader July-September period, despite concerns around rainfall patterns and financing conditions.

Dealer confidence improves for coming months

FADA’s latest survey indicates that expectations have become more positive for the near term. Around 51.24 per cent of dealers expect growth during July, while 41.79 per cent foresee stable business conditions and only 6.97 per cent anticipate a decline.

The confidence level becomes stronger over the next three months. According to the survey, 66.17 per cent of dealers expect growth through the July-August-September period, representing the strongest reading in recent surveys. The outlook is tied to expected demand support from monsoon recovery, Kharif sowing activity and festive-season purchases during events such as Ganesh Chaturthi and Onam.

The survey also showed that 38.31 per cent of dealers have revised their FY27 expectations upward, while 45.27 per cent have kept their outlook unchanged.

Risks remain despite stronger outlook

While the outlook has improved, dealers continue to flag several concerns that could affect market momentum. FADA identified monsoon shortfall and potential El Nino-related disruption to rural demand as the largest risks going forward.

Other concerns include July price increases introduced by manufacturers and the pace of financing recovery. Patchy rainfall in some regions could also affect buying patterns in rural markets, which remain important for overall industry volumes.

June performance and changing market trends

The stronger outlook follows a record June for India’s retail auto market. Total vehicle registrations rose 21.83 per cent year-on-year to 25,57,234 units, while passenger vehicle sales increased 28.63 per cent to 4,10,853 units. Two-wheeler registrations grew 21.22 per cent to 18,28,458 units, commercial vehicles rose 16.88 per cent to 90,972 units, and three-wheelers increased 16.20 per cent to 1,20,889 units.

The month also highlighted a shift in powertrain preferences. Alternative-fuel passenger vehicles, including CNG, hybrid and electric models, accounted for 40.35 per cent of retail sales for the first time. CNG accounted for the largest share at 24.33 per cent, while hybrids and EVs grabbed 8.27 per cent and 7.75 per cent respectively. Electric two-wheelers also crossed into double digits with a 10.60 per cent retail share. Meanwhile, passenger vehicle inventory rose to 32-34 days, remaining above FADA’s recommended 21-day benchmark.

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