ICRA predicts moderate growth of 3-5% for Indian two-wheeler industry by FY27

Ratings agency ICRA, in its latest report, has projected a moderate growth of 3-5% in wholesale volumes for the Indian two-wheeler industry in FY27. It said the sector is expected to face headwinds from a high base effect, the possibility of a weak monsoon due to El Nino conditions, and vehicle price increases driven by inflationary pressures.

Despite these challenges, ICRA said the industry continues to display resilience, supported by improving domestic demand, healthy retail momentum, and sustained growth in exports. The growth is also likely to benefit from improved affordability following GST rationalisation and replacement purchases. However, it cautioned that geopolitical tensions in West Asia remain a key risk, as any escalation could disrupt supply chains and increase industry costs.

The report said domestic wholesale volumes grew strongly by 15.7% year-on-year to 19 lakh units in May 2026, aided by stronger consumer demand following GST 2.0 reforms and advance purchases ahead of anticipated price hikes by manufacturers. Retail sales also remained robust, rising 7.5% year-on-year during the month.

It further said the electric mobility segment continued to gain momentum, with retail electric two-wheeler sales surging 71.7% year-on-year to 1,72,148 units in May 2026. Electric two-wheelers accounted for 8.9% of total two-wheeler sales, reflecting growing consumer acceptance and continued improvement in the EV ecosystem.