India’s two-wheeler industry is on the road to recovery and is expected to reach its pre-pandemic peak by the financial year 2025-26 (FY26), according to an Economic Times report. With several positive factors aligning, the outlook appears robust for this critical segment of the Indian automobile market.

Sales Recovery from Pandemic Lows

In FY19, India’s two-wheeler sector recorded its highest-ever sales at 21.2 million units. However, the COVID-19 pandemic disrupted global markets, and this industry was no exception. As lockdowns hit consumer spending and supply chains, sales saw a significant drop in the following years.

Over time, the industry has shown signs of steady recovery. By FY25, sales rebounded to approximately 19.6 million units, inching closer to the record set in FY19. This consistent upward trend has led many industry leaders and analysts to project that FY26 could see a full recovery, possibly surpassing the pre-pandemic high.

Key Drivers Behind Growth

According to Shailesh Chandra, President of the Society of Indian Automobile Manufacturers (SIAM), several factors are contributing to this resurgence:

• Improved access to credit and lower EMIs are making two-wheelers more affordable, especially for first-time buyers.

• A good monsoon is expected to positively impact the rural economy, which accounts for a large share of two-wheeler demand.

• Government policies promoting electric vehicle (EV) adoption, such as subsidies and tax benefits, are further driving sales volumes.

Positive Sentiments from Industry Leaders

Honda Motorcycle & Scooter India’s Director (Sales and Marketing), Yogesh Mathur, echoed the optimism, stating that the company anticipates strong single-digit growth, even in the face of rising prices. The demand trend has been resilient, supported by higher disposable incomes and urban recovery.

Mathur emphasized that price hikes may not deter consumers, especially those upgrading their existing two-wheelers or purchasing additional ones for convenience and commuting.

Urban vs Rural Demand Dynamics

While urban markets are showing signs of strong demand due to increased economic activity and job creation, the rural sector's performance will largely hinge on monsoon conditions and agricultural outcomes. A favourable monsoon would not only enhance rural incomes but also encourage vehicle upgrades and first-time purchases.

The availability of affordable financing in rural areas, supported by government and NBFC efforts, will be critical to capturing this growth potential.

Electric Two-Wheelers Driving the Future

Another major trend contributing to optimism in FY26 is the rise of electric two-wheelers. With brands like Ola Electric, Ather, TVS, and Bajaj investing heavily in EV technology and infrastructure, the market for clean mobility options is rapidly expanding.

The government’s push under schemes like FAME II (Faster Adoption and Manufacturing of Electric Vehicles) has made EVs financially viable for the average consumer. States offering additional incentives are further increasing the appeal of electric scooters and bikes.

Shailesh Chandra noted that this segment will likely play a pivotal role in helping the overall industry reclaim its past highs.

Challenges in Passenger Vehicle Segment

While the two-wheeler segment is on an upward trajectory, passenger vehicles (PV) are facing some challenges, especially at the entry-level.

Chandra acknowledged that lower-end PV customers are still cautious with spending. Rising vehicle prices, increased fuel costs, and the post-Covid economic pressure have slowed demand in this sub-segment. As a result, the passenger vehicle sector is growing at a slower pace compared to the two-wheeler market.

This contrast highlights how two-wheelers remain the most affordable and accessible form of transport for a large section of the Indian population.

Policy Support and Future Expectations

The Indian government’s proactive steps in boosting vehicle sales — particularly tax relief, credit access, and EV promotion — are reinforcing positive sentiment across the industry.

Industry insiders believe that if the current macroeconomic conditions hold — including stable fuel prices, healthy monsoon, and policy continuity — then FY26 could mark a landmark year for the two-wheeler sector.

The rebound in sales, combined with technological innovations and digital platforms for vehicle financing and servicing, will further strengthen this revival.

Conclusion

India’s two-wheeler industry is heading towards a historic recovery, likely hitting or even surpassing the FY19 record in FY26. With the convergence of strong rural and urban demand, EV adoption, and policy support, the segment is in a strong position to grow.

While passenger vehicles face some resistance due to entry-level buyer hesitation, the two-wheeler sector continues to attract interest thanks to its affordability, utility, and convenience.

Industry stakeholders, from SIAM to Honda, are confident that sustained growth will continue into the coming fiscal years, making India's two-wheeler market a key indicator of economic momentum and consumer confidence.

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