R. Suryamurthy
India’s two-wheeler industry is cruising towards a strong comeback, with sales expected to exceed pre-COVID levels by FY26. According to a report by CareEdge Ratings, the sector is poised for 8–9% volume growth in the upcoming fiscal year, driven by both domestic and export markets.
Momentum Continues
Over the last three years, the industry has shown steady improvement: sales grew by 8% in FY23, 10% in FY24, and 11% in FY25. FY25’s performance was especially notable, with a 21% jump in exports and 9% growth in domestic sales. Improved global economic conditions and recovering rural demand at home were key contributors.
Growth Enablers for FY26
Several tailwinds are expected to support growth in FY26:
- Lower Inflation: Easing prices are improving consumer sentiment.
- Higher Disposable Income: Income tax rebates up to ₹12 lakh/year are boosting household budgets.
- Monetary Support: The RBI has slashed interest rates by 100 basis points since February 2025, making auto loans cheaper.
- Favorable Weather: A good monsoon could further fuel rural demand.
“FY26 will likely see the industry outpace its pre-COVID peak, with export growth of 12–14% and domestic growth of 6–8%,” said Madhusudhan Goswami, Assistant Director at CareEdge Ratings.
However, new emission norms (OBD-II Phase-B) and a high FY25 base could slightly moderate the growth rate.
Segment-Wise Snapshot
- Scooters: Leading the pack, scooters recorded 17% growth in FY25 and have consistently posted double-digit growth for three years. They are expected to continue outperforming motorcycles in FY26.
- Motorcycles: Still dominant in total volume, motorcycle sales grew 9% in FY25. Entry-level models (75cc–125cc) comprised 72% of the market, while executive and premium bikes grew faster at 12% and 10%, respectively. FY26 could see premium and executive segments lead growth, reflecting rising aspirational buying.
Electric Two-Wheelers: At a Crossroads
Electric two-wheelers (E2Ws) saw sales hit 1.2 million units in FY25. However, the growth rate slowed due to a reduction in government subsidies, a trend that will continue in FY26. The focus is now on creating a self-reliant EV ecosystem with better infrastructure and less dependence on financial aid.
