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Informist, Wednesday, Jun. 25, 2025

 

By Anand JC

 

NEW DELHI – Experts believe India's two-wheeler wholesale sales may hit the pre-COVID peak in 2025-26 (Apr-Mar), and surpass the previous record set in FY19. Automakers will likely achieve this feat despite the surge in prices of two-wheelers, partially driven by expectation of an above-normal monsoon rains and improvement in rural incomes this year.

 

Two-wheeler sales comprise over 80% of all the automobile wholesale sales in the country. As such, they are sensitive to any major economic developments. One such event was the COVID-19 pandemic.

 

The uncertainty caused by the COVID-19 pandemic led to a downturn in sales for the industry to nearly 14 million units in FY22, said Rohan Kanwar Gupta, vice president and sector head, Corporate Ratings, ICRA Ltd. Wholesale two-wheeler sales in FY25 grew 10% on year to 19.8 million units, including domestic sales and exports. While encouraging, this is still lower than sales recorded in FY19 and are yet to recover.

 

In FY19, Indian automakers sold 21 million two-wheelers to local dealerships, 5% higher on year. In March 2020, India imposed a lockdown to curb spread of COVID-19.

 

The key auto segment in FY25 has also emerged as a bright spot in overall auto sales as two-wheeler retail sales grew at a faster clip than others, up just over 7% on year. Most of the growth in two-wheeler retail sales in FY25 came from rural India, similar to passenger vehicles and three-wheelers. As per data from the Federation of Automobile Dealers Association, two-wheeler sales in urban India grew 6.8%, while rural sales grew 8.4%. Rural India contributes around 40-50% of India's two-wheeler sales, according to industry estimates.

 

"The growth (in FY25) remained supported by an improvement in rural demand and came on a partially curtailed base," Gupta said. Having contracted 11% on year in FY22, two-wheeler despatches registered a growth in FY23, FY24, and FY25, but the growth was not quick enough for the overall despatches to return to the pre-COVID high, partially due to the surge in prices of two-wheelers.

 

According to ICRA, two-wheeler prices had increased 30-40% in the last three-four years, restricting the growth of two-wheeler sales in India. Regulatory measures aimed at improving safety features of automobile units have impacted the prices of two-wheelers and passenger vehicles alike in the recent past.

 

 

The government last week asked companies to fit all two-wheelers with anti-lock braking systems from January, as per media reports. These braking systems prevent wheels from locking up, thereby increasing control over the vehicle.

 

Currently, only vehicles over a capacity of 125 cubic centimetres are required to have anti-lock braking systems, but they form only around 16% of the overall two-wheeler market, Kotak Institutional Equities said in a report on Jun. 20. This means 84% of the two-wheeler market could likely see more price hikes in compliance with these new norms.

 

"In terms of price increase, we expect single-channel ABS to incrementally cost Rs3-5k (INR 3,000-INR 5,000) per vehicle, which translates into a 4-6% price increase for the <125cc>.

 

Pain from regulatory measure-led price hikes continues to be felt in FY26. In April, two-wheeler retail sales grew only 2% on year despite festival demand on back of Navratri, Gudi Padwa, and Id. This subdued market sentiment for the segment was partially influenced by the upcoming on-board diagnostics norm-related price hikes, FADA President C.S. Vigneshwar had said in a statement in April.

 

Despite pricing pressures, ICRA expects the two-wheeler industry to grow 6-9% in FY26. "...aided by steady replacement demand and healthy rural incomes, driven by early indications of a normal monsoon," Gupta said. The rating firm expects domestic two-wheeler sales to reach the record high levels registered in FY19.

 

SCOOTERS PICKUP SPEED

Two-wheeler sales in India comprise those of scooters, motorcycles, and mopeds, according to Society of Indian Automobile Manufacturers. Traditionally, motorcycles have comprised over 66% of overall two-wheeler sales in India, with scooters taking up around 30% of the balance. In FY18, motorcycles contributed 62.5% to two-wheeler wholesale sales and scooters contributed 35.7%. While contribution of motorcycles to the two-wheeler despatches pie is higher now compared with the pre-COVID era, scooters' contribution has fallen.

 

But, bit by bit, scooters' contribution is crawling upwards. In FY25, motorcycles contributed 66% to two-wheeler despatches. Scooters comprised 31.4%, the highest since 31.6% in FY19. Not just the contribution, scooter despatches too grew at a faster 16% on year in FY25, compared with the 8% growth registered by motorcycles.

 

"Over the recent past, scooter segment's growth has outpaced motorcycle segment, led by factors such as a shift in consumer preferences, advent of electric scooters, increase in female ridership etc.," Gupta said. He expects this trend of scooters-over-motorcycles to continue over the medium term, leading to an increase in the proportion of scooter sales in the overall pie.

 

Increase in preference for scooters has also been aided by the government's support for electric scooters through subsidies and schemes. Penetration of electric scooters has increased to 6.1% in FY25, up from around 5.4% in FY24.

 

"I used to say that with EV coming in for the scooter industry, the category share will go up. I think that is exactly what is happening," TVS Motor Co. Ltd.'s Director and Chief Executive Officer K.N. Radhakrishnan told analysts in a post-earnings conference call in April.

 

"It is likely to go up further because scooter has got its own convenience, its own benefit, and with EV scooters...I think we are expecting scooters will definitely grow," he added.

 

Experts have said newer models and additional features offered by original equipment manufacturers have spurred the preference for scooters over motorcycles.

 

EXPORTS CUSHION

Companies also relied heavily on exports to boost their overall despatches. Companies sold 19 million two-wheelers in India in FY25, 9.1% higher on year, but exported 4.2 million two-wheelers, up a staggering 21% on year. Given the higher appetite for two-wheelers abroad, companies have also expanded the list of countries they export.

 

"Export volume growth over the past decade was led by acceptance of two-wheelers as a cost-effective alternative for last-mile connectivity in the major cities of undeveloped nations, mainly in Latin America and Africa, besides other countries in the Indian sub-continent," Gupta said.

 

Indian companies have also been exploring newer geographies like West Asia and Europe. Demand for two-wheelers abroad are also increasing due to congested cities in these markets, lack of public transport infrastructure, lower disposable income, and lower penetration levels of two-wheelers, according to an industry expert.  End

 

Edited by Akul Nishant Akhoury

 

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