ICRA projects two-wheeler (2W) wholesale volumes to grow by 3-5% year over year (YoY) in FY2027 – Wholesale volumes in the domestic market are expected to grow by 3-5% in FY2027, with the pace moderating from FY2026 due to a high base, even as GST-led affordability benefits and replacement demand remain supportive. While the deficient and uneven monsoon could weigh on rural demand, the upcoming festive and wedding season, supported by inventory build-up and favourable consumer sentiment, is expected to aid volumes in the near term. However, potential vehicle price increases amid inflationary pressures could partly moderate the growth momentum.

• Retail volume growth accelerates in 5M FY2027 – Retail 2W volumes expanded by 18.5% YoY in 5M FY2027 compared to growth of 14.2% in FY2026 and 8.1% in FY2025, reflecting a sustained improvement in demand. However, growth is expected to moderate over the remainder of FY2027 due to a high base effect, likely price increases and the impact of weaker monsoon rainfall on rural demand and farm incomes.
• Electric vehicle (EV) adoption to increase steadily – Electric 2W penetration increased to 9.3% in 5M FY2027 from 6.5% in FY2026, while scooter penetration rose to 22.8% from 16.6%. Moderating battery prices, wider product offerings and improving consumer acceptance are expected to support adoption despite lower fiscal incentives.