R. Suryamurthy
India’s two-wheeler industry is set for robust growth, with sales volumes projected to surpass pre-COVID levels in the fiscal year 2026, according to a new report from CareEdge Ratings. The industry is expected to achieve an 8-9 percent volume growth in FY26, building on a healthy performance in the preceding three fiscal years.
The positive outlook follows strong volume growth of 8 percent in FY23, 10 percent in FY24, and 11 percent in FY25. This momentum was particularly bolstered in FY25 by a substantial 21 percent recovery in exports and a 9 percent increase in domestic volumes. The export revival is attributed to the stabilization of key international markets that had previously been affected by inflation, high interest rates, and currency issues. Domestically, growth was driven by a significant uptick in rural demand and sustained urban demand.
CareEdge Ratings anticipates that easing inflation, increased disposable income resulting from a full income tax rebate for individuals earning up to Rs 12 lakh per annum, and a more accommodative monetary policy will further boost consumer sentiment and affordability. The Reserve Bank of India (RBI) has cumulatively cut interest rates by 100 basis points since February 2025, including a recent 50 basis points cut announced in June 2025. A favorable monsoon could further strengthen these growth prospects.
“CareEdge Ratings anticipates that the two-wheeler industry is set to vroom past the pre-COVID levels in FY26 with healthy volume growth of approximately 8-9 percent, aided by export volumes accelerating at 12-14 percent and domestic sales volumes maintaining a steady 6-8 percent rise,” said Madhusudhan Goswami, Assistant Director at CareEdge Ratings.
While the high base of FY25 and the implementation of OBD-II Phase-B emission norms may slightly temper the pace, the overall outlook remains strong.
Segment-Wise Performance:
The scooter segment has been a strong performer, recording double-digit sales growth for the third consecutive year ending March 2025, with increases of 26 percent, 13 percent, and 17 percent over the last three fiscal years, respectively. Scooter sales are expected to remain healthy and outpace motorcycle sales growth in FY26.
Motorcycles continue to dominate the market in terms of sales volume. In FY25, motorcycle sales volume grew by 9 percent, while scooter sales grew by 17 percent. This growth trend is expected to continue in FY26.
Within motorcycles, sales volume of entry-level motorcycles (75cc to 125cc) grew by 8 percent year-on-year in FY25, while executive (125cc to 250cc) and premium (>250cc) motorcycle volumes grew by 12 percent and 10 percent, respectively. Entry-level motorcycles accounted for 72 percent of total sales volume in FY25. While the share of the entry-level segment has gradually declined from its FY19 peak, signs of recovery have been visible over the last three years. The premium and executive motorcycle segments are anticipated to lead growth in FY26, supported by strong consumer sentiment and greater financial flexibility.
Electric Two-Wheelers (E2Ws):
The increasing demand for electric two-wheelers has also contributed to the overall growth of the two-wheeler market. E2W sales reached approximately 1.20 million units in FY25. However, the deceleration of E2W volume growth in FY24 and FY25 can be attributed to the Central Government’s reduction of subsidies, which will further decrease in FY26. The focus has now shifted towards developing a self-sustaining EV ecosystem, reducing reliance on subsidies, and enhancing charging infrastructure.