KATHMANDU: Petrol-powered cars are facing growing inventory pressure at Indian dealerships as buyers increasingly move towards CNG, hybrid and electric vehicles.
According to data from the Federation of Automobile Dealers Associations (FADA), alternative-fuel passenger vehicles accounted for 40.59% of retail sales in July 2026. Petrol vehicles held a 41.68% share. The gap has narrowed to just over one percentage point from around 13 percentage points a year ago.
The shift has also affected dealership inventory. More than one-fourth of passenger vehicle inventory is now reported to be 60-70 days old. This is significantly higher than the usual inventory cycle of around 30-33 days.
Vehicle dispatches by manufacturers were also higher than retail sales in July. This added to the inventory build-up. However, dealers say changing customer preferences are becoming an equally important factor.
CNG, hybrid and electric vehicles are gaining ground as buyers look for alternatives to petrol. FADA data shows CNG alone accounted for about 24% of passenger vehicle sales in July, while electric vehicles reached nearly 8%.
Changing customer preferences and concerns over E20 petrol are affecting buying decisions in India. At the same time, diesel cars are gaining some interest again, with a 17.73% market share in July.
Some buyers are considering diesel vehicles due to concerns over E20 petrol. Diesel has not been subject to the same ethanol-blending issue, which has helped revive interest in the powertrain.
The recent increase in diesel demand is also supported by the growing popularity of SUVs and the availability of new diesel models in the market.
The trend highlights a major shift in India’s passenger vehicle market. Petrol remains the largest single fuel type, but CNG, hybrid and EV models are now rapidly closing the gap.
