India’s Two-Wheeler Market Set To Surpass Pre-COVID Levels With 8-9% Growth In FY26: Report

India’s two-wheeler industry is poised to cross pre-COVID volume levels in FY26, with estimated growth of 8-9% for the fiscal year, according to a new report by CareEdge Ratings. This momentum follows a healthy performance over the past three years, supported by recovering export markets, robust rural and urban demand, and rising electric vehicle (EV) adoption.

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The domestic two-wheeler segment has recorded consistent volume growth of 8%, 10%, and 11% in FY23, FY24, and FY25, respectively, the report stated. In FY25 alone, the industry witnessed a 9% growth in domestic sales and a strong 21% rebound in exports, driven by stabilisation in key international markets that had previously grappled with inflation, interest rate hikes, and currency instability.

“Two-wheeler sales are set to maintain strong momentum in FY26, building on a robust FY25 performance,” the report said. Despite a high base and a 1-2% price increase resulting from the implementation of OBD-II Phase-B emission norms, the industry is expected to sustain an 8-9% overall volume growth.

Domestic volumes are projected to rise by 6-8% in FY26, while exports are likely to accelerate by 12-14%, bolstered by strong overseas demand. Madhusudhan Goswami, Assistant Director at CareEdge Ratings, attributed the expected growth to easing inflation, improved rural sentiment backed by a favourable monsoon outlook, and higher income levels. The rise in EV adoption is also expected to play a critical role.

Supporting the sector’s momentum, the Reserve Bank of India’s cumulative 100 basis points rate cut since February 2025, including a 50 bps cut last week, is likely to enhance affordability and stimulate consumer demand further, Goswami added.

While some moderation in domestic growth may occur due to the elevated base, CareEdge’s Associate Director Arti Roy noted that the market remains resilient. She said the implementation of OBD-II Phase-B norms would have minimal impact and highlighted strong demand in the executive and premium motorcycle segments as key growth drivers in the coming year.

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CareEdge also pointed to the electric two-wheeler segment as a growing contributor to overall volume. Sales of electric two-wheelers reached approximately 1.20 million units in FY25, accounting for a 19% year-on-year increase. This builds on 29% growth in FY24 and a massive 180% surge in FY23, when EVs made up 4.38% of total two-wheeler sales, up from 1.78% the year before.

With both domestic and export markets gaining strength, and electric mobility gaining ground, India’s two-wheeler industry appears set for continued expansion in FY26.

(With inputs from PTI)