ICRA estimates that the Indian two-wheeler industry will witness moderate wholesale volume growth of 3–5% in FY2027. While growth is expected to remain supported by improved affordability arising from GST rationalisation and replacement demand, the sector could face challenges from a high base effect, a potentially weak monsoon due to El Niño, and inflation-led vehicle price increases.
The Indiantwo-wheeler industry continues to demonstrate resilience, supported by improving domestic demand, healthy retail momentum, and sustained export growth, according to the latest sector update by ICRA Limited.
Domestic wholesale volumes recorded a robust 15.7% year-on-year growth in May 2026, touching 1.9 million units, driven by stronger consumer demand following GST 2.0 reforms and early purchases ahead of anticipated vehicle price hikes by manufacturers. Retail volumes also remained healthy, growing 7.5% year-on-year during the month.
Commenting on the sector outlook, ICRA highlighted that despite supportive domestic demand drivers, geopolitical tensions in West Asia remain a key monitorable, as any escalation could disrupt supply chains and impact industry cost structures.
The export segment also continued to strengthen, with May 2026 export volumes rising 31.3% year-on-year, while overall exports expanded 23.3% in FY2026, aided by expanding product portfolios and increasing global acceptance of Indian two-wheeler brands.
Meanwhile, the electric mobility segment gained further traction. Retail electric two-wheeler sales stood at 1,72,148 units in May 2026, marking a sharp 71.7% year-on-year increase. Electric two-wheelers now account for 8.9% penetration within the broader two-wheeler segment, reflecting growing consumer acceptance and improving ecosystem support.
Retail demand continued to benefit from improved affordability, seasonal purchases during the marriage season, and a wider product mix across entry-level and aspirational categories. However, factors such as extreme heat conditions affecting showroom footfalls and intermittent supply constraints in select models moderated the pace of growth.
Overall, while the sector enters FY2027 on a strong footing, growth momentum is expected to normalise amid evolving macroeconomic and geopolitical uncertainties.
Key Highlights:
• Domestic wholesale volumes grew 15.7% YoY in May 2026
• Retail sales increased 7.5% YoY in May 2026
• Export volumes rose 31.3% YoY in May 2026
• FY2027 wholesale volume growth projected at 3–5%
• Electric two-wheeler sales surged 71.7% YoY in May 2026
• E2W penetration reached 8.9% of total two-wheeler sales
• Weak monsoon outlook and West Asia geopolitical tensions remain key risks
