India’s Two-Wheeler Retail Sales Grow Nearly 20% in August, Festive Demand Lifts Auto Sector

India’s two-wheeler market continued to show strong momentum in August, with retail sales estimated to have grown 18–20 per cent year-on-year, helped by the Onam festival, improving consumer demand and a favourable base effect, according to a Yes Securities report released on Thursday.

The report said organic customer inquiries for two-wheelers increased by around 10–12 per cent during the month, with demand remaining healthy in both urban and rural markets. Premium internal combustion engine (ICE) models and electric vehicles (EVs) continued to be the main growth drivers as automakers and dealers increased supplies ahead of the upcoming festive season.

The improvement in two-wheeler demand comes at an important time for the automobile industry, with the festive period typically accounting for a significant share of annual vehicle purchases. Higher customer enquiries and stronger acceptance of premium models suggest that buyers are increasingly willing to spend on better-equipped vehicles rather than choosing purely on the basis of price.

Passenger vehicle retail sales also remained strong, rising 11–13 per cent year-on-year. The Onam festival provided an additional boost of around 20 per cent, while urban markets continued to perform better than rural markets.

Despite healthy vehicle dispatches, passenger vehicle inventories remained relatively controlled at about four weeks. However, customers continued to face longer waiting periods for some popular alternative-fuel models.

Demand for medium and heavy commercial vehicles also remained firm. The proposed November 2026 ban on BS4 vehicles entering the Delhi-NCR region could provide an additional replacement-demand boost as fleet operators prepare to upgrade older vehicles.

Commercial vehicle dealer inventories were considered comfortable at around 20–22 days, while tractor sales continued to register healthy double-digit growth, pointing to sustained demand in the rural and agricultural segments.

The report also highlighted particularly strong demand for electric vehicles. Channel partners, especially those in urban and Tier-1 and Tier-2 cities, reported continued strong traction for EVs even through August.

“Model mix remains healthy as top-end variants are seeing stronger acceptance as consumers increasingly value technology, performance and features beyond just cost savings,” the report said.

Demand for CNG and EV vehicles also recorded a notable jump, with inquiries and bookings rising by more than 30 per cent. New product launches were among the factors supporting this growth, while concerns surrounding E20 fuel compatibility also influenced consumer interest in alternative-fuel vehicles.

Strong demand, however, has resulted in longer waiting periods for several popular models. The report estimated waiting periods of around three to four months for some EVs and one to one-and-a-half months for high-demand ICE models.

Automakers have also raised vehicle prices to offset higher input costs, with another round of increases of around 0.5–1.5 per cent being implemented across major manufacturers. Despite the price increases, discounts on both ICE and EV models remained broadly unchanged from the previous month.

Importantly, dealers are not relying on aggressive discounts to generate sales. The report noted that discounts remain selective and largely linked to specific models and inventory levels rather than reflecting a broad-based weakness in demand.

Overall, the August trends suggest that India's automobile market is entering the festive season on a relatively strong footing, with two-wheelers, premium vehicles and EVs emerging as key areas of growth. Continued festive demand, new model launches and the transition towards cleaner and more feature-rich vehicles could further support retail sales in the coming months.

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