Fuel prices have risen by about Rs 7.5 per litre since May 15, as global crude oil prices surged due to the ongoing conflict in West Asia and supply concerns around the Strait of Hormuz.
IMAGE: Kindly note the image has been posted only for representational purposes.
A view of the vehicles in a queue as severe traffic congestion persists on the National Highway. Photograph: Kind courtesy Ankit Tyagi/ANI Photo
The rise in conventional fuel prices amid the West Asia crisis appears to be turning into a boon for electric vehicle (EV) sales in India.
EV penetration across segments touched an all-time high of 11 per cent in May, compared with around 7 per cent for 2025-26 (FY26), the Federation of Automobile Dealers Associations (Fada) said on Monday.
Key Points
- Electric vehicle penetration across vehicle segments touched a record 11 per cent in May amid rising fuel costs.
- India’s automobile retail sales rose 10 per cent year-on-year to 2.53 million units, marking a record May.
- Passenger vehicle sales jumped 23 per cent, supported by strong rural demand and improving alternative fuel adoption.
- EV market share increased across two-wheelers, passenger vehicles, commercial vehicles and three-wheelers compared with last year.
- Dealers remain cautiously optimistic for June, expecting monsoon progress and farm activity to support demand.
EV Penetration Hits Record High
This comes as India’s automobile retail sales posted their best-ever May numbers across passenger vehicles (PVs), three-wheelers (3Ws), tractors, and overall registrations, rising 10 per cent year-on-year (Y-o-Y) to 2.53 million units despite concerns stemming from the West Asia conflict.
Fuel prices have risen by about Rs 7.5 per litre since May 15, as global crude oil prices surged due to the ongoing conflict in West Asia and supply concerns around the Strait of Hormuz.
“Because of higher fuel prices, the shift towards EVs increased to over 11 per cent in May compared to 7 per cent in FY26,” said Fada President C S Vigneshwar.
In two-wheelers (2Ws), EV share climbed to 9.25 per cent from 6.11 per cent a year ago; in 3Ws, it rose from 61.46 per cent in May 2025 to 64.45 per cent this May; in PVs, from 4.51 per cent to 6.63 per cent; and in commercial vehicles (CVs), from 1.37 per cent to 2.86 per cent.
During the month, PV sales rose 23 per cent, tractors 11 per cent, 2Ws 8 per cent, CVs 5 per cent, and 3Ws 4 per cent Y-o-Y.
Auto Retail Sales Surge
“The sequential softness of 7 per cent versus April reflects the customary seasonal moderation after April and a delayed southwest monsoon, which kept May largely a pre-sowing month across much of rainfed India.
“That growth held up despite this confluence of pressures underlines the resilience of underlying demand,” said Vigneshwar.
Rural Demand Drives Growth
PV retails were the clear standout at 402,591 units, marking a robust 23 per cent expansion, with the rural-led nature of the recovery remaining firmly intact.
Rural markets grew 30 per cent against 19 per cent growth in urban markets.
“Overall alternative fuel share rose to 38 per cent in May, as compressed natural gas share increased to 23 per cent and EV share improved to 7 per cent.
“Dealers pointed to a revival in small cars alongside sustained demand for sport utility vehicles,” he added.
Maruti Tata Mahindra Gain
Market leader Maruti Suzuki India recorded a 33 per cent rise in sales to 164,925 units during the period, while Tata Motors grew 39 per cent to 55,544 units and Mahindra & Mahindra rose 10 per cent to 51,311 units.
2W retails stood at 1.84 million units in May, up 8 per cent Y-o-Y, with urban markets growing 12 per cent Y-o-Y and rural markets 5 per cent Y-o-Y.
Dealers credited steady commuter and rural demand to marriage-season purchases and continued affordability under the GST 2.0 framework, even as heatwave conditions dampened showroom footfall in several markets and selective model-wise supply gaps weighed on momentum.
In 2Ws, EV share climbed to 9 per cent from 6 per cent a year ago.
CV retails came in at 83,823 units, up 5 per cent Y-o-Y, with rural markets growing 8 per cent Y-o-Y, outpacing urban markets at 2.62 per cent — a sign that goods movement demand is expanding beyond the metros.
Tractor sales also rose 11 per cent Y-o-Y to 83,092 units.
Monsoon Outlook In Focus
Looking ahead to June, dealer sentiment remains measured, with 50.52 per cent of dealers expecting growth, 39.9 per cent expecting a flat market, and only 9.59 per cent foreseeing a decline.
With the southwest monsoon having set in over Kerala in June and beginning its northward advance, demand expectations are anchored on the progress of the monsoon, early kharif sowing activity, and the tail end of the marriage season, supported by a stable financing environment after the Reserve Bank of India held the repo rate at 5.25 per cent in its June review.
Feature Presentation: Ashish Narsale/Rediff
