Two-wheeler industry likely to see moderate growth in FY26
New Delhi New Delhi: The two-wheeler (2W) industry has witnessed a slowdown in growth in recent months, however, analysts expect the sector to grow at a high-single-digit rate in FY26, according to an HSBC Global Research report.The two-wheeler segment’s compound annual growth rate (CAGR) over the past decade has been less than 3 per cent, making it one of the slowest-growing segments in the automobile industry. Electrification in the 2W segment has been progressing at a slow pace despite substantial government incentives. HSBC notes that urban demand for economy motorcycles has been impacted the most due to the growing popularity of electric scooters.
These e-scooters are becoming more popular in urban areas, where better roads, better charging infrastructure and affordable commuting options are driving adoption.
“We believe electrification has impacted urban demand for the economy motorcycle segment the most. E-scooters are a better option in urban markets due to better roads, charging infrastructure and affordable commutes,” the report said. On the positive side, rural demand is seeing improvement due to favourable reservoir levels. Export markets are also showing signs of improvement, leading to a more optimistic outlook for the industry. Management estimates suggest overall industry growth will be 6-8 per cent in FY26, with the 125cc motorcycle segment expected to outpace the broader market. Moreover, between December and March, various companies are set to launch over nine new variants across electric and internal combustion engine (ICE) models, offering consumers multiple price points. Scooter sales (both ICE and EV) have reached a new high of 36 per cent in FY25, while it declined to 31 per cent in FY21 from 35 per cent in FY18. This surge is primarily driven by the rise of electric scooters, which have captured market share from the economy motorcycle segment (75-110cc).
Overall, while the industry is facing challenges, the combination of improving rural demand, improving exports and a growing scooter market – especially in the EV segment – presents a mixed but promising outlook for FY26.
