Two-Wheeler Industry Set to Grow 6-9% in FY2026: ICRA

India's two-wheeler industry recorded a sharp rebound in December 2025, supported by year-end demand, policy-led affordability improvements and improving macro conditions. According to credit rating agency ICRA, the industry is expected to post a 6-9 per cent year-on-year growth in domestic volumes in FY2026, driven by recovery in replacement demand, urban consumption and stable rural incomes.

Also read: Tata Motors CV Expects Double-Digit Growth in Q4 on Govt. Infrastructure Push

Domestic wholesale volumes rose sharply by 38.0 per cent year-on-year in December 2025 to around 1.5 million units, aided by a low base and inventory restocking ahead of the new calendar year. On a cumulative basis, wholesale volumes grew by 4.8 per cent during 9M FY2026 (April–December), reflecting a gradual recovery over the fiscal year despite intermittent demand softness.

Retail Volumes Rise

Retail volumes increased by 9.5 per cent year-on-year in December 2025, supported by year-end discounts and pre-buying by customers ahead of expected price increases in January 2026. Improved affordability, better financing availability and higher showroom footfalls contributed to retail momentum, particularly in entry-level motorcycles and scooters.

FY2026 Growth Outlook

According to ICRA estimates, domestic two-wheeler volumes is projected to grow by 6–9 per cent year-on-year in FY2026. The growth outlook is supported by GST rate cuts under the GST 2.0 framework, improved replacement demand after multiple years of subdued sales, recovery in urban discretionary spending and stable rural incomes, aided by a normal monsoon and continued government expenditure.

Robust Export Performance

Exports continued to be a key growth driver for the industry. Monthly export volumes rose by 25.2 per cent year-on-year, whilst cumulative industry exports increased by 24.1 per cent during 9M FY2026. The strong performance was supported by a low base in the corresponding period of FY2025 and improving demand across key overseas markets.

Electric Two-Wheeler Adoption

Electric two-wheeler sales gained further traction in December 2025, with retail volumes reaching 97,744 units, marking a year-on-year growth of 32.8 per cent. However, electric two-wheeler penetration remained stable at around 6–7 per cent during 9M FY2026, indicating a phase of gradual adoption amid evolving consumer preferences and infrastructure readiness.

Steady Recovery Likely

While December 2025 witnessed a sharp year-on-year rebound, the broader recovery in FY2026 is expected to remain steady and policy-supported, with exports and gradual domestic demand normalisation playing a central role in sustaining industry growth.