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India’s two-wheeler industry is poised to surpass pre-Covid sales levels in the financial year 2025-26, with an expected volume growth of 8-9 per cent, according to a CareEdge Ratings report released on Monday.

Key tailwinds such as easing inflation, higher disposable income driven by a full income tax rebate for individuals earning up to Rs 12 lakh per annum and a more accommodative monetary policy -- highlighted by the cumulative 100 bps rate cut by the RBI since February 2025 with recent 50 bps rate cut announced in June 2025 -- are set to boost consumer sentiment and affordability. A favourable monsoon could further strengthen the growth prospects, setting the stage for the industry volumes to surpass pre-Covid levels.

CareEdge Ratings notes that during the past three years, ending FY25, the Indian two-wheeler industry maintained healthy volume growth of 8 per cent, 10 per cent, and 11 per cent in FY23, FY24, and FY25, respectively.

Volume growth in FY25 was supported by a substantial 21 per cent export recovery and a 9 per cent rise in domestic volumes. The export recovery was due to stabilisation in key markets affected by inflation, high interest rates, and currency issues in earlier years. Domestic volumes were supported by a substantial uptick in rural demand and sustained urban demand, the report states.

Madhusudhan Goswami, assistant director at CareEdge Ratings said, “CareEdge Ratings anticipates that the two-wheeler industry is set to vroom past the pre-Covid levels in FY26 with healthy volume growth of approximately 8-9 per cent, aided by export volumes accelerating at 12-14 per cent and domestic sales volumes maintaining a steady 6-8 per cent rise.”

“This growth trajectory will be driven by strong export demand, rising adoption of electric vehicles (EVs), easing inflation, and a revival in rural sentiment, supported by expectations for a favourable monsoon and improved income levels. Additionally, the cumulative 100 bps rate cut by the RBI since February 2025, with the recent 50 bps rate cut announced last week, is expected to enhance affordability and boost demand,” he added.

In FY25, rural areas accounted for 58.30 per cent of total retail registrations, marginally up from 57.9 per cent in FY24. While FY25 wholesale volumes of 23.81 million units remain just below the FY19 peak, the industry is steadily closing the gap. Though recovering from post-Covid challenges and price sensitivity, entry-level motorcycles have consistently improved since FY23. A shift in consumer preference towards scooters and executive motorcycles has also reshaped the market, signalling evolving demand patterns, the report added.

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)