Two-wheeler volumes likely to grow by 8-9% in FY26: Report

Domestic two-wheeler volumes are expected to grow 8-9 per cent this fiscal, surpassing the pre-COVID levels, driven by a host of factors including easing inflation and prospects of a favourable Monsoon among others, a report said on Monday.

The report by CareEdge Ratings also noted that the domestic two-wheeler industry has maintained a healthy volume growth of 8 per cent, 10 per cent, and 11 per cent in FY23, FY24, and FY25, respectively.

Volume growth in FY25 was supported by a substantial 21 per cent export recovery and a 9 per cent rise in domestic volumes. The export recovery was due to stabilisation in key markets affected by inflation, high interest rates, and currency issues in earlier years, it said.

Domestic volumes were supported by a substantial uptick in rural demand and sustained urban demand, CareEdge said.

"Two-wheeler sales are set to maintain strong momentum in FY26, building on a robust FY25 performance. Despite a high base and a modest 1-2 per cent price increase due to the implementation of OBD-II Phase-B norms, the industry is well-positioned for 8-9 per cent volume growth in FY26," it said.

"CareEdge Ratings anticipates that the two-wheeler industry is set to vroom past the pre-COVID levels in FY26 with healthy volume growth of approximately 8-9%, aided by export volumes accelerating at 12-14 per cent and domestic sales volumes maintaining a steady 6-8 per cent rise," said Madhusudhan Goswami, Assistant Director at CareEdge Ratings.

This growth trajectory will be driven by strong export demand, rising adoption of electric vehicles (EVs), easing inflation, and a revival in rural sentiment, supported by expectations for a favourable monsoon and improved income levels, Goswami said.

Additionally, the cumulative 100 bps rate cut by the RBI since February 2025 with the recent 50 bps rate cut announced last week, is expected to enhance affordability and boost demand, he added.

Noting that while domestic two-wheeler sales growth may moderate slightly due to a higher base, strong export momentum and rising EV adoption will help to sustain overall industry volume growth, Arti Roy, Associate Director at CareEdge Ratings said implementing OBD-II Phase-B emission norms is expected to have minimal impact, with the market showing resilience and adaptability.

"Additionally, good traction in executive and premium segment motorcycles is expected to support this growth in FY26", she added.

CareEdge Ratings also said that the overall growth of two-wheeler volume over the last three fiscal years has been supported by the increasing demand for electric two-wheelers (E2Ws).

In FY23, E2Ws sales reached approximately 0.78 million units, accounting for 4.38 per cent of total two-wheeler sales (compared to 1.78 per cent in the previous year), reflecting a remarkable year-on-year growth of 180 per cent, albeit on a very low base.

This positive trend continued with E2W sales growing by 29 per cent in FY24 and 19 per cent in FY25 to reach 1.20 million units in FY25, CareEdge said.