New Delhi: The two-wheeler (2W) sector has experienced a decline in growth in recent months; however, analysts anticipate a rebound with a high-single-digit growth rate projected for FY26, as per a report from HSBC Global Research.
Over the past decade, the compounded annual growth rate (CAGR) for the two-wheeler segment has remained below 3 percent, positioning it as one of the slower-growing areas within the automobile industry.
Despite significant government incentives, the transition to electrification in the 2W sector has been gradual. HSBC highlighted that urban demand for economy motorcycles has been particularly affected by the increasing popularity of electric scooters.
These e-scooters are gaining traction in urban environments, where enhanced road conditions, improved charging infrastructure, and economical commuting options facilitate their adoption.
"The impact of electrification has been most pronounced on the urban demand for economy motorcycles. E-scooters offer a more attractive option in urban settings due to superior roads, charging facilities, and cost-effective travel," the report stated.
On a brighter note, rural demand is showing signs of recovery, supported by favorable water reservoir levels. The export market is also improving, contributing to a more positive outlook for the industry.
Management forecasts suggest an overall industry growth of 6-8 percent in FY26, with the 125cc motorcycle segment expected to outperform the broader market.
Furthermore, from December to March, several companies are preparing to introduce over nine new variants, encompassing both electric and internal combustion engine (ICE) models, thereby providing consumers with a range of price options.
Scooter sales, encompassing both internal combustion engine (ICE) and electric vehicles (EV), have achieved a record high of 36 percent in FY25, following a decrease to 31 percent in FY21 from 35 percent in FY18. This increase is largely attributed to the growing popularity of electric scooters, which have begun to capture market share from the economy motorcycle category (75-110cc).
In summary, despite the challenges confronting the industry, the resurgence of demand in rural areas, enhanced export performance, and the expanding scooter market—particularly within the EV sector—offer a mixed yet optimistic perspective for FY26.
