India's passenger vehicle market experienced a notable shift in July, with sales of petrol-powered cars and SUVs declining amid consumer apprehension over the new E20 fuel blend. Simultaneously, diesel vehicle penetration saw a marginal increase, while electric vehicles (EVs) and other alternative fuels continued their upward trend.
E20 Concerns Impact Petrol Sales
According to data released by the Federation of Automobile Dealers Associations (FADA), the share of petrol-powered cars in passenger vehicle sales decreased from 43.15% in June to 41.68% in July. This dip is attributed directly to growing concerns surrounding E20, a fuel blend composed of 20% ethanol and 80% petrol.
Conversely, diesel's share in new car sales edged up from 16.32% in June to 17.73% in July, indicating a segment of buyers opting for diesel alternatives. FADA Vice President Sai Giridhar highlighted consumer hesitation around the E20 transition, which has also nudged buyers towards compressed natural gas (CNG), hybrid, and electric vehicles.
"There is a need for clear and confident consumer communication on the E20 fuel transition to convert hesitant petrol buyers," stated Giridhar, emphasizing the importance of addressing consumer doubts.
Electric Vehicles Sustain Growth
Electric vehicles continued to demonstrate strong performance, accounting for 8% of overall passenger vehicle sales for the second consecutive month in July. This figure marks a significant increase from the 4.2% penetration seen in FY22, with total EV retail sales hitting a historic high of 3,27,901 units across all categories. The overall EV penetration for the month reached approximately 12.7%.
EVs in the two-wheeler segment also saw a record surge, reaching 11.24% of sales, up from 7.65% a year ago, despite reported short supplies of high-demand models.
Overall Auto Market Achieves Record July
Despite the internal shifts within the passenger vehicle segment, the broader Indian automobile market posted its best-ever July across nearly all categories. Total industry retail sales soared to 25,91,138 units, marking a robust 25.89% year-on-year increase. This represents the strongest July growth outside of Covid-impacted base years.
- Passenger vehicle retail sales grew 19.13% year-on-year, reaching 4,16,555 units.
- Two-wheeler sales jumped 28% year-on-year to 18,18,289 units.
- Three-wheeler sales rose 16.16% to 1,33,778 units.
FADA attributed this positive momentum to factors such as GST 2.0-led affordability, improved retail finance options, and favorable festival timing, alongside the increasing demand for alternative fuels like CNG.