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Informist, Tuesday, Apr. 7, 2026

 

By Anand JC

 

NEW DELHI – Sales growth of two-wheelers is expected to moderate in 2026-27 (Apr-Mar) to just under 10%, primarily due to a high base registered over two years, input cost pressures that may force companies to go for price hikes, and preliminary weather forecasts which predict a weaker monsoon, experts said. The segment was among the biggest beneficiaries of the cut in goods and services tax announced nearly mid-way through FY26, which helped it register wholesale sales growth of 13% to 24.06 million units, a record high.

 

Most experts Informist spoke to forecast two-wheeler sales in FY27 to grow 7-9%, while rating agency ICRA expects sales to grow 3-5%. "Even so, underlying demand is expected to remain supported by replacement cycles and healthy rural incomes," ICRA said in a report. "The recent GST rate cut for two-wheelers below 350 cc (cubic centimetres) should continue to aid affordability, although a prolonged West Asian conflict could add to inflationary pressures," ICRA said.

 

Crisil Intelligence has pegged the growth rate for the segment at 7-9% for FY27. "The Indian two-wheeler market will definitely grow faster than other markets...but the ongoing West Asia crisis has led to a sentimental impact across various automobile segments, thereby leading to a drop in the forecasts across (automobile) categories," said Hemal Thakkar, senior director and senior practice leader at Crisil Intelligence.

 

India's GDP growth can also significantly influence the momentum of two-wheeler sales in FY27, as it is by far the biggest automobile segment in the country. India's GDP growth prospects for FY27 face pressures from the West Asia war, as well as uncertainty about the monsoon. Analysts said a prolonged war in West Asia could also impact India's GDP growth going forward. This, in turn, can impact the growth forecasts for the segment. Slower GDP growth may herald lower purchasing power and bring down demand in the economy.

 

Weather forecaster Skymet Tuesday said it expects the 2026 southwest monsoon to be below normal. A weaker monsoon is another pressure point for industry sales as it may impact rural incomes. In FY26, rural areas accounted for nearly 58% of the two-wheelers sold in India. "Weaker monsoon will have a downward bias on sales forecast for FY27 because if rural India does not perform well, two-wheeler sales may come under pressure," Thakkar said.

 

India Ratings has a 'neutral' outlook on the Indian automobile industry for FY27. The agency expects domestic sales of two-wheelers to grow 6-8% in FY27 on the back of better incomes in rural areas, easier financing, and a continued shift toward premium motorcycles and scooters.

 

"Looking ahead, the industry is expected to grow (around) 7–9% in FY27, led by steady domestic demand and strong export momentum (mid-to-high teens), with scooters and EVs key growth drivers while motorcycles see stable mid-single-digit growth," Nirmal Bang Institutional Equities said in a report. "However, the near-term outlook remains range-bound due to geopolitical risks and fuel cost volatility, even as EV adoption benefits from higher fuel prices and overall demand momentum stays intact," the brokerage firm said.

 

EXPORT VIEW

Exports accounted for roughly 19% of the 24.06 million two-wheelers sold in FY26. Indian companies exported 4.55 million units in FY26, up 24% from the previous year. Crisil Intelligence expects the segment's exports to grow 8-10% in the ongoing financial year.

 

"Logistics is a challenge because costs have gone up, availability of containers is a challenge," Thakkar said. However, he said companies will be able to overcome these challenges by opting for a longer route or by paying the higher cost.

 

Nearly 60-70% of India's two-wheeler exports are sold in Latin America and Africa, combined. "Demand is still there in Latin America, but in Africa, while it is recovering, it faces challenges related to currency fluctuation and dollar availability," Thakkar said.

 

PRICE PRESSURES

The cost of acquiring two-wheelers has steadily crept up in the last few years because of input cost pressures and compliance costs. Automobile companies across segments had been considering price hikes since the final months of 2025, but remained measured in their approach to not disrupt the momentum created by the GST cut, which became effective on Sept. 22. In their analyst calls after the December quarter, companies flagged rising costs of commodities such as precious metals, aluminium, and copper.

 

Prices of crude oil have risen over 50% due to the ongoing war in West Asia, crossing the $100-per-barrel mark. Analysts expect this to cause further pain to the financials of automobile companies because of their exposure to crude-linked inputs.

 

"Input costs are rising because of the war in West Asia. I expect companies to take price hikes going forward," Aditya Khetan, lead analyst at SMIFS Ltd. covering automobile and ancillary firms, said. Automakers had hiked prices by around 1.0-2.5% in the March quarter to offset commodity cost pressures. Khetan expects the companies to raise prices by around 2% going forward, effectively reversing the benefits of the GST cut.

 

"There are commodity cost pressures building up – PVs: (around) 200bp+ and 2Ws: 300bp+ between Sep-2025 and Mar-2026," Nomura Research had said in a report recently. "While dealer feedback is positive, price hikes, fuel price increases and rising inflation pose demand risks in case the war in the Middle East prolongs," Nomura said. Additionally, two-wheeler makers may also take further price hikes as they comply with Bharat Stage 7 emission norms this financial year.

 

"Two-wheeler segment is price-sensitive, but the demand may sustain as it is the most preferred mode of transport in rural areas," Crisil Intelligence's Thakkar said. "Potential price hikes may force customers to defer their purchases or defer the replacement of an existing vehicle, which will have an impact on demand," Thakkar said.

 

MARKET SHARE

Retail sales of two-wheelers grew 13.4% in FY26 to 21.42 million as the category reclaimed levels last registered in pre-COVID years. However, among the major listed firms, only TVS Motor Co. Ltd. and Eicher Motors Ltd.'s Royal Enfield motorcycles managed to gain retail market share, even as the others lost.

 

Hero MotoCorp. Ltd. still dominates Indian roads with a market share of 28.40%, down roughly 40 basis points from a year ago, according to data from the Federation of Automobile Dealers Associations. "Hero MotoCorp remains a good bet as their market share will only go up in FY27," Khetan said, adding that TVS Motor continues to remain the top bet. TVS Motor's retail market share climbed to 18.89% in FY26 from 17.49% in FY25.  End

 

Edited by Ashish Shirke

 

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