India’s two-wheeler industry saw a sharp rebound in December 2025, supported by year-end demand, policy-led affordability gains and improving macro conditions. According to ICRAICRA, domestic two-wheeler volumes are expected to grow 6–9% year-on-year in FY2026, driven by a recovery in replacement demand, improving urban consumption and stable rural incomes.
Domestic wholesale volumes surged 38% year-on-year in December 2025 to around 1.5 million units, aided by a low base and inventory restocking ahead of the new calendar year. On a cumulative basis, wholesale volumes rose 4.8% during 9M FY2026 (April–December), reflecting a gradual recovery despite intermittent demand softness earlier in the year.
Retail Demand Drivers
On the retail side, volumes increased 9.5% year-on-year in December, supported by year-end discounts and pre-buying ahead of expected price hikes in January 2026. Improved affordability, easier financing and higher showroom footfalls lifted demand, particularly in entry-level motorcycles and scooters.
Looking ahead, ICRA expects FY2026 growth of 6–9%, supported by GST 2.0-led tax rationalisation, a revival in replacement demand after multiple weak years, recovery in urban discretionary spending and stable rural incomes aided by a normal monsoon and continued government spending.
Exports remained a key growth driver, with monthly shipments rising 25.2% year-on-year, while cumulative exports grew 24.1% during 9M FY2026, supported by a low base and improving demand across key overseas markets.
Electric Vehicle Adoption
In the electric two-wheeler segment, retail sales rose 32.8% year-on-year in December to 97,744 units, though penetration remained steady at 6–7%, indicating gradual adoption amid infrastructure and consumer readiness challenges.
Overall, while December’s rebound was pronounced, FY2026 growth is expected to remain steady and policy-supported, with exports and gradual domestic demand normalisation underpinning industry momentum.
This recovery is further supported by a steady rise in rural incomes following a favorable monsoon and a growing replacement cycle for older vehicles. The sector is successfully leveraging both a stabilising home market and a diversifying global strategy to cement its position as a world-leading automotive hub.