New Delhi, August 25, 2025: India’s two-wheeler industry is poised for a 6–9% year-on-year growth in FY2026, driven by steady replacement demand, improved urban sentiment, and stronger rural incomes boosted by a favorable monsoon, according to a research report released by ICRA Limited. The forecast comes even as retail sales took a hit in July 2025, dropping 6.5% year-on-year amid subdued urban footfalls and heavy monsoon-related disruptions in rural markets.
ICRA’s outlook reflects cautious optimism, with expectations of a recovery in consumption patterns—particularly as the festive season approaches—and a potential Goods and Services Tax (GST) rate cut that could act as a catalyst for growth.
In July 2025, original equipment manufacturers (OEMs) registered wholesale dispatches of 1.5 million units, a 9.2% increase year-on-year, reflecting dealer stocking ahead of anticipated festive demand. However, this did not translate into retail traction, largely due to, a) Muted urban demand caused by inflationary pressures and discretionary spending cutbacks and b) Heavy rainfall in key rural regions, limiting footfalls and in-store conversions.
Despite this temporary softness in the domestic retail space, India’s two-wheeler export market showed robust momentum with a 32.3% year-on-year growth in July, supported by recovery in key African and Latin American markets.
The electric two-wheeler segment, which has emerged as a sunrise sector within India’s mobility ecosystem, saw a minor sequential dip. Electric two-wheeler sales fell 2.3% month-on-month to 102,900 units in July, with their market penetration remaining steady at 6–7% of the overall two-wheeler volumes.
India’s electric mobility story continues to hold promise, with strong policy backing, an expanding charging infrastructure, and growing consumer awareness pushing the category toward wider adoption. Despite short-term fluctuations, the sector is shaping into the next big global growth story and India is well-positioned to lead this transformation.
“We expect the upcoming festive season to provide a meaningful push to two-wheeler retail sales. While the July retail performance was underwhelming, underlying demand drivers remain intact,” said Vinutaa S, Vice President and Sector Head – Corporate Ratings, ICRA Limited. “Electric mobility continues to be a key focus area. With stable policy support and evolving technology, the electric two-wheeler market is on a long-term growth trajectory,” she added.
As India accelerates its journey toward green mobility, the two-wheeler segment—both internal combustion engine (ICE) and electric—remains a critical driver of the broader automotive landscape. The upcoming festive months will be crucial in determining the sector’s near-term momentum, but its long-term fundamentals remain strong.
While short-term retail trends suggest a bumpy road, the long-term outlook for India’s two-wheeler industry, especially electrics, is clear: it’s fast becoming the growth engine of India’s mobility transformation, and a global benchmark for clean, affordable, scalable transportation.
