ICRA estimates two-wheeler domestic wholesale volumes to grow by 3-5% YoY in FY2027, after recording a growth of around 9% in FY2026. Retail sales growth materially improved in H2 FY2026, aided by GST reforms and the festive season. The OEMs are expected to maintain strong credit profiles, despite investments planned for EV platforms.

ICRA projects two-wheeler (2W) wholesale volumes to grow by 3-5% year over year (YoY) in FY2027 – The industry demand growth is expected to moderate in FY2027, even as the industry is expected to continue to draw support from a steady replacement demand and healthy rural incomes; the recent cut in Goods and Services Tax (GST) rates for 2Ws less than 350 cc is also likely to aid affordability and support demand, even as a prolonged West Asian conflict could cause inflationary pressure.

Retail volumes continues to grow at a steady pace – The GST rate cut has driven retail volume growth to 11.5% in 11M FY2026 on a YoY basis, strengthening consumer sentiment and supporting steady offtake. This policy-led boost is expected to continue aiding retail volumes. Retail sales grew by 7% in FY2025, supported by improving rural demand conditions and a favourable festive season, which provided a strong base for the subsequent uptick.