Will Two-Wheeler Sales Surge by 9% in FY 26?

Mumbai, June 9 (NationPress) The two-wheeler sector in India is on track to exceed pre-Covid sales figures in the financial year 2025-26, with a projected volume growth of 8-9 percent, as detailed in a report from CareEdge Ratings published on Monday.

Contributing factors such as declining inflation, increased disposable income fueled by a full income tax rebate for individuals earning up to Rs 12 lakh annually, and a more supportive monetary policy—highlighted by a cumulative 100 basis points rate reduction by the RBI since February 2025, including a recent 50 basis points cut announced in June 2025—are expected to enhance consumer sentiment and affordability. A favorable monsoon may further bolster growth prospects, setting the groundwork for industry volumes to surpass pre-Covid levels.

According to CareEdge Ratings, the Indian two-wheeler sector has displayed robust volume growth over the past three years, achieving 8 percent, 10 percent, and 11 percent in FY23, FY24, and FY25, respectively.

The volume growth in FY25 was underpinned by a significant 21 percent recovery in exports and a 9 percent increase in domestic volumes. The recovery in exports was attributed to stabilization in key markets that previously faced inflation, high interest rates, and currency challenges. Domestic volume growth was driven by a notable rise in rural demand alongside sustained urban interest, as stated in the report.

Madhusudhan Goswami, assistant director at CareEdge Ratings, remarked, “We predict that the two-wheeler industry is set to rev past pre-Covid levels in FY26 with robust volume growth of approximately 8-9 percent, supported by export volumes increasing at 12-14 percent and domestic sales maintaining a steady 6-8 percent growth.”

“This upward trajectory will be propelled by strong export demand, growing adoption of electric vehicles (EVs), easing inflation, and a revival in rural sentiment, bolstered by expectations of favorable monsoons and improved income levels. The cumulative 100 basis points rate cut by the RBI since February 2025, along with last week's 50 basis points reduction, is anticipated to enhance affordability and stimulate demand,” he added.

In FY25, rural regions accounted for 58.30 percent of total retail registrations, slightly up from 57.9 percent in FY24. Although FY25 wholesale volumes of 23.81 million units remain just shy of the FY19 peak, the industry is consistently closing the gap. While recovering from post-Covid challenges and price sensitivity, entry-level motorcycles have shown continual improvement since FY23. A shift in consumer preference towards scooters and executive motorcycles has also transformed the market, indicating evolving demand patterns, the report concluded.