Two-Wheeler Sales Expected to Grow by 9% in FY26: CareEdge Report

Mumbai: India’s two-wheeler industry is set to surpass pre-Covid sales levels in the financial year 2025-26, with volume growth projected at 8–9%, according to a report released Monday by CareEdge Ratings.

The report highlights several positive factors contributing to this outlook, including easing inflation, increased disposable incomes—boosted by full income tax rebates for individuals earning up to ?12 lakh annually—and a more supportive monetary environment. The Reserve Bank of India (RBI) has implemented a cumulative 100 basis point (bps) rate cut since February 2025, including a recent 50 bps reduction in June. These measures are expected to improve consumer sentiment and affordability.

A favorable monsoon season could further fuel rural demand, helping the industry not only recover but also exceed pre-pandemic sales volumes.

Over the last three financial years, the two-wheeler segment has shown steady growth, recording volume increases of 8% in FY23, 10% in FY24, and 11% in FY25.

In FY25, industry growth was driven by a 21% rebound in exports and a 9% rise in domestic sales. The export surge followed stabilization in key international markets that were previously impacted by inflation, high interest rates, and currency fluctuations. Meanwhile, domestic sales were bolstered by rising rural demand and continued strength in urban markets.

Madhusudhan Goswami, Assistant Director at CareEdge Ratings, stated, “We anticipate that the two-wheeler industry will roar past pre-Covid levels in FY26 with a healthy growth rate of 8–9%. Export volumes are expected to grow by 12–14%, while domestic sales should maintain a steady 6–8% increase.”

He added that this growth will be driven by strong export momentum, increasing adoption of electric vehicles (EVs), softer inflation, and a revival in rural purchasing power, aided by better income levels and a good monsoon outlook. The recent RBI rate cuts are also expected to make two-wheelers more affordable, further boosting demand.

Rural India accounted for 58.3% of total retail two-wheeler registrations in FY25, slightly higher than 57.9% in FY24. Wholesale volumes for FY25 reached 23.81 million units—just shy of the FY19 peak—indicating that the industry is close to full recovery.

The report also notes continued improvement in the entry-level motorcycle segment since FY23, along with a notable shift in consumer preferences toward scooters and executive-class motorcycles. This trend reflects changing market dynamics and evolving customer needs.

With inputs from IANS