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, according to a report by CARE Ratings Ltd..
Easing inflation, increased disposable income from full income tax rebates for some individuals, lower interest rates following the RBI’s cumulative 100 bps rate cut since February 2025, with a 50 bps rate cut announced in June 2025, are some tailwinds expected to drive demand. A favourable monsoon could further strengthen growth prospects, allowing the industry to surpass pre-COVID levels, the report said.
The scooter segment recorded strong double-digit sales growth for the third consecutive year ended March 2025. In the last three years, growth has been at 26 per cent (FY25), 13 per cent (FY24) and 17 per cent (FY23), respectively. Scooter volumes touched nearly 250 million units in FY25, a record high that was last recorded in the peak year of FY19.
In FY25, motorcycle sales volume grew by 9 per cent (previous year it was 8 per cent), while scooter sales grew by 17 per cent (PY - 13 per cent). This growth trend is expected to continue in FY26. Motorcycles remain popular due to their fuel efficiency, cost-effectiveness, and versatility, while scooters have gained traction, especially among urban commuters. The rising appeal of electric two-wheelers (E2Ws) has also contributed to overall growth, the report said.
Despite the OBD-II Phase-B rollout, the impact on entry-level motorcycles is expected to be limited, driven by improving macroeconomic conditions, such as higher disposable income from tax rebates and lower interest rates, enhancing affordability and a good monsoon expected in FY26, the report said.
There was a deceleration in E2W volume growth in FY24 and FY25, which was attributed to the reduction of subsidies on E2Ws . This subsidy will be further reduced to ₹2,500 per kWh, and capped at ₹5,000 per vehicle in FY26, the report said.