Domestic automobile retail sales rose 31.82 per cent year-on-year to a record 25,36,920 units in September helped by festive demand and a low base, according to data released by the industry body Federation of Automobile Dealers Associations (FADA) on Tuesday.

As per the data, retail sales rose 4.69 per cent from August. However, September marked the industry's best-ever month.

The headline annual growth should be viewed with caution as September 2025 sales were impacted by purchase deferments ahead of the implementation of GST 2.0, FADA said.

Moreover, the industry recorded its best-ever September across five of the six vehicle categories, while the first half of FY27 also saw record retail sales of 1,55,12,319 units, up 20.77% year-on-year, it added.

Segment-wise, two-wheeler sales rose 33.08 per cent year-on-year to 17,90,188 units, while passenger vehicle sales increased 32.10 per cent to 4,27,213 units.

Commercial vehicle sales grew 37.62 per cent to 1,03,557 units, crossing the one-lakh mark in September for the first time.

Three-wheeler sales increased 22.25 per cent to 1,32,570 units, while tractor sales rose 13.75 per cent to 76,906 units.

Wheeled construction equipment sales jumped 38 per cent to 6,486 units.

"September'26 was the best-ever September in Indian Auto Retail," FADA President Sai Giridhar said, while cautioning that the 31.82 per cent year-on-year growth was the most base-distorted print of the year.

He further noted that the more meaningful indicators were the record first-half sales, 4.69 per cent month-on-month growth and about 17 per cent growth in the first five months of FY27, excluding the distorted September comparison.

Additionally, alternative-fuel vehicles accounted for 41 per cent of passenger vehicle retail sales in September, almost matching petrol vehicles at 41.27 per cent.

Electric vehicle penetration in passenger vehicles rose to 8.45 per cent.

Total electric vehicle retail sales across categories reached an all-time monthly high of about 3.34 lakh units, taking overall EV penetration to around 13 per cent, FADA said.

Looking ahead, 75.57 per cent of dealers expect sales to grow for October,.

While 19.46 per cent expect a flat market and 4.98 per cent foresee a decline.

The industry has expected that demand deferred during “Pitru Paksha” to convert into deliveries during Navratri and Dussehra.

Booking pipelines are already building with 63 per cent of dealers reporting rising bookings, it said.

For October-December, 78.28 per cent of dealers expect growth, while 17.65 per cent expect a flat market and about 4 per cent anticipate a decline.

In addition, FADA described the near-term outlook as cautiously optimistic, with festive demand conversion, affordability and inventory levels emerging as key factors to watch.