Mumbai: The two-wheeler sector in India is poised to reach an important landmark in the fiscal year 2025-26, as sales are expected to exceed pre-Covid figures for the first time since the pandemic.
A report by CareEdge Ratings published on Monday indicates that the sector is set for strong volume growth of 8-9% in FY26, buoyed by favorable economic conditions and enhanced consumer sentiment.
The report emphasizes various favorable conditions fueling the sector's expansion, such as declining inflation, higher disposable income — especially from the complete income tax rebate for those earning up to ₹12 lakh annually — and a more lenient monetary policy approach by the Reserve Bank of India (RBI). The RBI has reduced repo rates by a total of 100 basis points since February 2025, with a 50 bps reduction declared earlier this month, thereby making vehicle financing easier and more affordable.
An advantageous monsoon season is anticipated to enhance rural demand, thereby accelerating the industry's rebound. Madhusudhan Goswami, Assistant Director at CareEdge Ratings, stated, “CareEdge Ratings expects the two-wheeler sector to surge beyond pre-Covid levels in FY26, with robust volume growth around 8-9%, supported by export volume increases of 12-14% and stable domestic sales growing at 6-8%.”
The sector has exhibited robust recovery in the last three fiscal years, with volume increases noted at 8% in FY23, 10% in FY24, and 11% in FY25. The latest fiscal year experienced a 9% increase in domestic volumes, while exports surged by an impressive 21% as major global markets started to recover from earlier economic disturbances.
Rural demand has become a vital growth driver, with rural regions representing 58.3% of total retail registrations in FY25, a slight rise from 57.9% the year before. Although the total wholesale volume of 23.81 million units in FY25 remains slightly beneath the FY19 high, the difference is decreasing.
Significantly, the market has experienced a change in consumer preferences, with increasing interest in scooters and premium motorcycles, reflecting changing buyer habits. Moreover, the growing use of electric vehicles (EVs) is significantly influencing the transformation of the industry framework.
Even with persistent price sensitivity and continuous recovery hurdles in the entry-level sector, steady progress since FY23 indicates a hopeful future for India's two-wheeler market.
(Inputs from IANS)