Indian car buyers trade up selectively as CNG, EVs gain ground over fuel; SUV growth reshapes price ladder

Indian passenger vehicle (PV) buyers are showing signs of selective premiumisation, even as the fuel mix shifts towards alternatives to petrol, according to Deloitte India’s latest auto sector tracker.

The Rs 12 lakh-20 lakh price band recorded the strongest growth in passenger vehicle sales in the second quarter of FY27, while petrol’s share of registrations declined as electric vehicles (EVs) and compressed natural gas (CNG) gained ground, according to Wheelwatch: Deloitte India’s auto sector tracker.

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The Rs 12 lakh-20 lakh band grew 33.6% year-on-year in Q2 FY27, gaining 1.2 percentage points in segment share, Deloitte said in its auto tracker report. In contrast, the Rs 7 lakh-12 lakh band, which accounts for nearly half of passenger vehicle sales, contracted 0.4%.

The trend points to affordability-led demand following the GST 2.0 changes, the report said, with buyers showing greater traction in a higher price band even as the largest-selling segment saw a marginal decline.

Passenger vehicle wholesale volumes grew 30.7% year-on-year to 1.4 million units during the quarter, accelerating from 25.9% growth in Q1 FY27. Sub-compact and compact SUVs led the expansion, growing 31% and 53.1%, respectively. Retail sales grew at a slower 22.2%.

Petrol loses ground as CNG and EV registrations rise

The shift in the price mix came alongside a change in fuel preferences. Petrol’s share of passenger vehicle registrations fell 2.8 percentage points sequentially to 42.6% in Q2 FY27, even as overall registrations remained broadly flat.

Electric passenger vehicle registrations nearly doubled year-on-year to around 97,000 units, taking EV penetration to 6.7% from 6% in Q1 FY27, according to data cited by Deloitte.

CNG registrations grew around 50% year-on-year to 233,000 units, more than twice EV volumes, making it the largest alternative to petrol during the quarter. CNG vehicles also outsold petrol vehicles in Gujarat, Haryana, Maharashtra and Rajasthan.

Dealers attributed part of the shift from petrol to lower running costs and consumer hesitation around the transition to E20 fuel, the report said.

Diesel gained the most share sequentially, rising 1.8 percentage points to 33.6%, followed by EVs, which gained 0.7 percentage points, and CNG, which gained 0.4 percentage points.

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SUV growth reshapes the price ladder

The broader premiumisation trend was also visible within the SUV market. Compact SUVs gained 3.3 percentage points in segment share, with feature-rich models increasingly matching or exceeding entry-premium vehicles on technology and equipment.

Deloitte said this overlap appeared to be drawing buyers away from traditional larger SUVs and the premium entry point. Mid-size SUVs lost 1.9 percentage points in share, the steepest decline among segments, as sub-compact and compact SUVs offered increasingly sophisticated driver-assistance and infotainment features.

The report also pointed to buyers upgrading to pre-owned premium brands, adding pressure on the traditional mid-size SUV segment where brand perception may not justify pricing above ₹50 lakh.

However, the gap between wholesale and retail growth remains a watchpoint for the sector. Dealer inventory rose from 33–35 days at end-July to 43–45 days by end-September, around twice the recommended 21 days, as dealers stocked up ahead of the festive season.

Retail conversion during the festive period will be key to sustaining wholesale momentum, Deloitte said.