ICRA projects 3-5% growth in domestic two-wheeler volumes for FY27

Credit rating agency says domestic two-wheeler wholesale volumes may grow 3-5% in FY27, while exports and electric vehicle demand continue to support the industry

The domestic two-wheeler industry is projected to witness moderate wholesale volume growth of 3-5 per cent year-on-year (Y-o-Y) in FY2027, according to a domestic market report released by credit rating agency ICRA on Wednesday.

 

While demand continues to be supported by structural regulatory reforms and healthy replacement cycles, overall growth momentum for the fiscal is expected to be constrained by a high statistical base and a weak monsoon forecast.

 

The industry commenced the new fiscal on a strong note, with domestic wholesale volumes jumping 29 per cent Y-o-Y in April 2026 to reach 1.9 million units. ICRA attributed this sharp wholesale spike primarily to improved vehicle affordability following the implementation of the recent GST 2.0 rationalisation measures.

   

In comparison, real-time retail demand grew at a more moderate but healthy pace of 13 per cent Y-o-Y during the month. On-the-ground sales were driven by lower-than-expected manufacturer price hikes, stable rural income flows from recent agricultural output, and a late wedding season that extended until mid-May.

 

The electric two-wheeler (e2W) ecosystem continued its steady upward trajectory, posting robust 68 per cent Y-o-Y retail growth in April 2026, with 154,337 units sold.

 

With this surge, e2W penetration within the broader two-wheeler market climbed to 8 per cent for the month, up from the 21.9 per cent Y-o-Y full-year volume expansion recorded over the entirety of FY2026. The rating agency noted that expanding product portfolios and improving total cost of ownership (TCO) parity are driving deeper consumer acceptance.

 

On the international front, monthly export volumes registered a substantial 38 per cent Y-o-Y increase in April, building on the 23 per cent growth achieved during FY2026. This comes despite persistent macroeconomic headwinds in several major overseas destinations.

 

Looking ahead, however, ICRA flagged significant downside risks. An El Niño-led weak monsoon forecast could hamper rural recovery in subsequent quarters, while domestic input-cost inflation remains a challenge. Crucially, the ongoing conflict in West Asia remains a primary threat to supply chains, with the potential to trigger commodity price inflation and disrupt export shipments in the coming months.