The country’s two-wheeler industry continues to demonstrate resilience, supported by improving domestic demand, healthy retail momentum, and sustained export growth, ICRA said in its latest sector update.
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The growth is expected to remain supported by improved affordability arising from GST rationalisation and replacement demand.
Yet, ICRA said, “The sector could face challenges from a high base effect, a potentially weak monsoon due to El Nino, and inflation-led vehicle price increases.”
Despite supportive domestic demand drivers, geopolitical tensions in West Asia remain a key monitorable, as any escalation could disrupt supply chains and impact industry cost structures, it added.
Domestic wholesale volumes recorded a robust 15.7 per cent year-on-year growth in May 2026, touching 19 lakh units, driven by stronger consumer demand following GST 2.0 reforms and early purchases ahead of anticipated vehicle price hikes by manufacturers, ICRA said.Retail volumes also remained healthy, growing 7.5 per cent year-on-year during the month, it added.
ICRA said the electric mobility segment gained further traction. Retail electric two-wheeler sales stood at 1,72,148 units in May 2026, marking a sharp 71.7 per cent year-on-year increase.
Electric two-wheelers now account for 8.9 per cent penetration within the broader two-wheeler segment, reflecting growing consumer acceptance and improving ecosystem support.
Retail demand continued to benefit from improved affordability, seasonal purchases during the marriage season, and a wider product mix across entry-level and aspirational categories, ICRA said.
However, factors such as extreme heat conditions affecting showroom footfalls and intermittent supply constraints in select models moderated the pace of growth, it added.