Indian car buyers are increasingly moving away from conventional petrol and diesel vehicles, with compressed natural gas (CNG), hybrid and electric models accounting for more than 40% of passenger vehicle retail sales for the first time in June, signalling a structural shift in consumer preference, according to the Federation of Automobile Dealers Associations (FADA).
Record Market Share for Alternative Fuels
FADA reported that alternative-fuel passenger vehicles captured a record 40.2% share of retail sales in June, up from 33.3% a year earlier and 38.02% in May. CNG remained the biggest contributor with a 24.3% market share, followed by hybrids at 8.3% and electric vehicles (EVs) at 7.8%. As a result, the combined share of petrol and diesel vehicles dropped below 60% for the first time.
| Period | Alternative-Fuel Share |
|---|---|
| June 2025 | 33.3% |
| May 2026 | 38.02% |
| June 2026 | 40.2% |
Record Sales Volume and Rural Demand
Retail sales rose 28.6% year-on-year to 410,853 units, the highest ever for June. Rural markets continued to outperform urban centres, with sales growing 35.1% compared with 24.7% in cities, although rural demand moderated sequentially as the delayed and uneven southwest monsoon kept some buyers in wait-and-watch mode, according to FADA.
Factors Driving the Transition
FADA said the growing preference for alternative fuels was supported by improving supplies after the West Asia ceasefire eased logistics and crude oil prices, healthy booking pipelines, fresh model launches and sustained consumer interest in fuel-efficient powertrains. Passenger EV retail volumes climbed to an all-time high of 31,823 units during the month, while healthy demand for CNG models further accelerated the transition away from traditional fuels.
The association noted that price increases of around 2-3% from June 1 by auto companies had little impact on bookings, suggesting underlying demand remained resilient, despite higher prices. Dealers also reported that supplies had normalised, following disruptions linked to tensions in the Gulf.
Key Statistics
- Alternative-fuel market share: 40.2% in June
- Retail sales: 410,853 units (28.6% YoY)
- EV retail volumes: 31,823 units (all-time high)
- CNG share: 24.3%, Hybrid: 8.3%, EV: 7.8%
- Price increases of 2-3% had little impact on bookings
The continued shift towards alternative-fuel vehicles indicates a structural change in India's automotive landscape, with implications for OEMs and component suppliers as they adjust production and sourcing strategies to meet evolving consumer preferences.
Sources:
