Alternative fuels overtake petrol in India’s car sales for first time as CNG, EVs and hybrids gain ground

The share of alternative fuels, which includes CNG, EV & hybrid vehicles, in total car sales surpassed that of petrol for the first time last month as customers continued to opt for powertrains offering lower running costs amid high fuel prices.

As per data collated by the Federation of Automobile Dealers Associations’ (FADA) from the VAHAN portal of the Ministry of Road, Transport & Highways (MoRTH), the share of alternative fuels (CNG 25.28%, Hybrid 9.04%, EV 7.63%) together touched 41.95%, edging past petrol/ethanol at 40.85% for the first time. Petrol still remains the single largest individual fuel.

FADA President Sai Giridhar said, “The defining development of the month was a structural one: for the first time in India’s history, alternative fuels — CNG, hybrid and electric combined — overtook petrol in the passenger vehicle market, at 41.95% against petrol’s 40.85%.” A little over a year ago petrol led over alternative fuels by nearly eleven percentage points.


Dealers attribute the shift to running-cost economics and continuing consumer hesitation around the E20 transition, which is nudging petrol buyers towards CNG, hybrids and EVs.

Overall, vehicle registrations or retail sales by dealers rose 18% to 2.42 million units year-on-year in August supported by strong demand in rural markets, marking the best-ever sales for the month for two-wheelers, three-wheelers, passenger and commercial vehicles. The strong growth, however, came on a low base as automobile sales were sluggish last year in the run-up to the cuts in goods and services tax (GST) rates, which came into effect September 22, 2025. Automakers dropped prices to pass on the lower GST rates, triggering a sales surge.

While a widening monsoon deficit — around 13%, with 14 states short of rain — held tractors flat last month; in every other segment rural markets outgrew its urban counterpart. Sales of passenger vehicles in rural areas rose 25% compared to 11% in urban centres. Rural commercial vehicles grew 16.33% (vs 12.79% in urban) and three-wheelers by 24% (vs -7% in urban). In the two-wheeler segment, while rural sales grew by 20.25%, urban sales went up by 19.07%.

Giridhar said, “Rural demand has begun to decouple from the monsoon - the farm-income-linked segment softened, yet the non-farm rural economy of livelihood mobility, goods movement and construction kept accelerating.”

Total EV retails across categories reached 2,98,448 units — the biggest-ever August and up 52.9% YoY — taking overall EV penetration to about 12.3% from 9.5% a year ago.

The share of electric in total two-wheeler sales continued to rise, growing to 10.68% (vs 7.66% in August 2025) and crossing the 10% mark in a non-festive month for the first time. In the commercial vehicle segment too, the share of electric in total sales rose to an all-time high of 5.18% from 2.06% a year ago.

Dealers said cautiously optimistic of good demand in the coming month as festive booking pipelines are already building. The widening monsoon deficit affecting rural enquiries, and the fresh round of vehicle price increases effective 1 September, though, remain a cause of concern.

FADA said October and November will be measured against last year’s GST-driven festive surge — an unusually high base — even as Diwali shifts into November. So the quarter’s real signal will be conversion in showrooms rather than year-on-year headlines.

“One year on from GST 2.0, a substantial part of the affordability benefit still sits with the consumer in small cars, commuter two-wheelers and commercial vehicles, but successive input-cost-led price increases have narrowed that cushion — the headroom is finite and thinning”, Giridhar said.

He added so far, however, structural anchors remain supportive with auto retails up 18.47% in the first five months of the fiscal year. The repo rate is steady, PM E-DRIVE and state policies are accelerating an electrification transition that has now carried alternative fuels past petrol in PV, and Bharat’s rural economy continues to outpace urban India, which should support sales in the industry.