Domestic Two-wheeler Sales Growth Estimated At 6-9% In FY26: ICRA
Domestic wholesale volumes grew by 7.2% on a year-on-year basis in August 2025 to 18 lakh units. Retail sales grew by a marginal 2.2% YoY, with growth constrained by excess rains and some purchase deferment linked to the GST rate cut.
Two-wheeler sales in India are estimated to grow by 6-9% in fiscal 2026 as compared to the previous fiscal, riding on the recent goods and services tax rate reduction, which is anticipated to support affordability and stimulate demand, besides steady replacement demand, urban recovery and healthy rural incomes driven by a normal monsoon, ratings agency Investment Information and Credit Rating Agency said on Tuesday.
Domestic wholesale volumes grew by 7.2% on a year-on-year basis in August 2025 to 18 lakh units, as original equipment manufacturers maintained healthy dispatches ahead of the festive season, ICRA said in a statement.
Retail sales, however, grew by a marginal 2.2% YoY, with growth constrained by excess rains and some purchase deferment linked to the GST rate cut; a pick-up is expected during the upcoming festive season, it added.
ICRA further said it estimates two-wheeler domestic volumes to grow by 6-9% YoY in Fiscal 2026.
"This projection is supported by steady replacement demand, an expected urban demand recovery, healthy rural incomes driven by a normal monsoon, and the recent GST rate reduction, which is anticipated to support affordability and stimulate demand," it noted.
In the electric two-wheeler segment, the ratings agency said retail volumes stood at 1,04,725 units in August 2025, showing modest sequential growth of 1.8%, with penetration remaining in the 6-7% range.
On the tractors segment, ICRA said the recent GST rate cut on tractors to 5% is expected to further support demand, particularly during the upcoming festive season.
The segment has demonstrated robust performance, with wholesale volumes reporting a significant growth of 28.2% YoY in August 2025, building on a cumulative growth of 11.7% YoY for the first five months of fiscal 2026, it added.
"Tractor volumes are estimated to grow at a moderate pace of 4-7% in financial year 2026. This growth is firmly backed by above-normal monsoons, which are expected to support agricultural production," ICRA said.
It further said, "The early onset of monsoon has led to the country receiving rainfall at 108% of the long period average until Sept. 17, 2025."
Consequently, tractor demand remained strong in August, with retail volumes rising by 30.1% YoY, driven by positive farmer sentiments and adequate rainfall.
"The industry also anticipates potential pre-buying ahead of the TREM V emission norms proposed to take effect from April 1, 2026," it added.
