Two-wheeler demand set to grow 3–5% in FY2027: ICRA Report

India’s two-wheeler industry is expected to post wholesale growth of 3–5 per cent year-on-year in FY2027, according to ICRA. The projection points to a stable market, but not a runaway recovery, because the sector is also facing pressure from a weak El Nino-led monsoon forecast, fuel-linked price increases and rising input costs. Even with those risks, the rating agency said demand should continue to benefit from GST rationalisation and better replacement buying.

ICRA’s forecast suggests the market will expand at a measured pace after a strong recent run. The expected growth is being supported by improved affordability following GST 2.0 reforms, along with replacement demand that is gradually strengthening. However, the agency warned that momentum may soften in the coming months if weather conditions weaken rural income or if commodity and fuel-related costs climb further.

April demand stayed strong

The industry delivered a sharp performance in April 2026. Domestic wholesale volumes rose 29.2 per cent year-on-year to 1.9 million units. That surge was linked to better demand conditions after the implementation of GST 2.0 reforms, which improved affordability for buyers.

Retail sales also moved up, though at a slower pace than wholesale dispatches. Volumes increased 13.0 per cent year-on-year in April, helped by lower-than-expected price hikes, stronger rural cash flows and healthy agricultural output. The extended wedding season, which lasted until mid-May, also gave demand an additional lift.

Electric two-wheelers kept rising

The electric two-wheeler segment continued to expand quickly. Retail sales stood at 1,54,337 units in April 2026, up 68.1 per cent year-on-year. For FY2026, e2W volumes grew 21.9 per cent year-on-year, while penetration in the overall two-wheeler market reached 8.1 per cent in April.

ICRA said the segment’s progress reflects wider consumer acceptance, more product choices and better cost competitiveness. These factors have helped electric models gain ground steadily in the market.

Exports remained a growth driver

Overseas shipments also supported the industry’s overall performance. Export volumes rose 38.3 per cent year-on-year in April 2026, even though some foreign markets continued to face challenges. For FY2026, exports grew 23.3 per cent, supported by a broader product portfolio and stronger global recognition of Indian two-wheeler brands.

ICRA said geopolitical uncertainty, especially in West Asia, remains a key risk for supply chains and commodity prices. Industry participants are closely watching how that situation develops.

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