India's two-wheeler volumes to cross 29 mn in FY27 on 7–9% growth: Crisil Ratings

India’s two-wheeler industry is expected to grow 7%–9% in fiscal year 2026-27, taking total volumes past 29 million units, ratings agency Crisil Ratings said on Tuesday.

The two-wheeler sales will be supported by stronger exports and a recovery in domestic demand after last year’s goods and services tax cuts, according to the report.

Domestic sales, which account for nearly 80% of industry volumes, are projected to remain the main growth driver as improved affordability, softer interest rates and easing inflation lift consumer sentiment.

Exports, on the other hand, are set to outpace the home market for the third consecutive year, the report said.

The proposed India–US trade agreement is unlikely to have a material impact on overall volumes as it focuses largely on motorcycles above 500 cc engines, a niche segment accounting for less than 1% of total industry sales.

India slashed GST on two-wheelers last year, lowering retail prices by about 7%–8%, which helped revive demand from September after a weak first half of fiscal 2026.

Rural sales also picked up on the back of a healthy monsoon and higher farm incomes, while urban demand strengthened following the tax revision.

“In fiscal 2027, we expect domestic two-wheeler volume to grow 6%–8%, broadly in line with the current fiscal,” said Anuj Sethi, senior director at Crisil Ratings.

Motorcycles, which make up about 60% of domestic volumes, are likely to post mid-single-digit growth, reflecting a mature commuter base and stable rural demand, Sethi said.

“Incremental growth is expected to come from scooters - early double-digit overall and mid-teens for e-scooters -driven by rising urban usage, increasing female participation, and expanding last-mile mobility needs, thereby gaining share in the overall mix,” he added.

Crisil’s analysis of six original equipment manufacturers accounting for nearly 95% of industry volumes shows revenue growth of 10%–12% in fiscal 2027, following an estimated 15%–17% rise this year.

Operating margins are expected to hold at around 16%, aided by operating leverage and premiumisation, even as aluminium and steel prices remain elevated.

While entry-level motorcycles up to 125cc continue to dominate sales, demand is gradually shifting toward higher-capacity models.

The share of bikes in the 150–350cc segment has risen to about 25% this fiscal from 23% in FY 2024-25, which, according to Crisil, reflects improving affordability and ongoing premiumisation.

“Two-wheeler exports are expected to remain a strong growth driver,” said Poonam Upadhyay, director at Crisil Ratings.

“Latin America, Africa and South Asia, together accounting for nearly 90% of export volume, are expected to anchor this expansion as demand conditions remain stable,” she added.

Crisil said sustaining growth momentum will hinge on trends in rural and urban incomes, commodity price movements and the pace of recovery in export markets, which will remain critical for volume visibility.