Rate cut by RBI will boost 2-wheeler sales in FY 2026: CareEdge Ratings

New Delhi [India], June 9 (ANI): India's two-wheeler industry is poised to surpass pre-COVID-19 sales levels, with an anticipated volume growth of 8-9 per cent in fiscal year 2026 (FY26), fuelled by rate cut by Reserve Bank of India ( RBI), a substantial recovery in exports and robust domestic demand, according to a report by CareEdge Ratings.

"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," said Madhusudhan Goswami, Assistant Director at CareEdge Ratings.

Over the past three fiscal years, the Indian two-wheeler industry has demonstrated healthy volume growth of 8 per cent in FY23, 10 per cent in FY24, and 11 per cent in FY25. The FY25 growth was particularly bolstered by a 21 per cent export recovery and a 9 per cent rise in domestic volumes.

However, domestic volumes saw a rise, supported by an uptick in rural demand and sustained urban demand.

Goswami added, "While domestic two-wheeler sales growth may moderate slightly due to a higher base, strong export momentum and rising EV adoption will help to sustain overall industry volume growth."

Key factors projected to drive demand include easing inflation, increased disposable income from a full income tax rebate for individuals earning up to Rs 12 lakh per annum, and a more accommodating monetary policy, highlighted by the RBI's cumulative 100 basis points rate cut since February 2025. A favourable monsoon is also expected to further strengthen growth prospects.

The scooter segment has shown strong performance, recording double-digit sales growth for three consecutive years ending March 2025, with increases of 26 per cent in FY23, 13 per cent in FY24, and 17 per cent in FY25. Scooter sales are expected to remain healthy and outpace motorcycle sales growth in FY26.

However, Motocycles is the most consistent two-wheeler segment. In FY25, motorcycle volume grew by 9 per cent, while scooter sales grew by 17 per cent.

"This growth trend is expected to continue in FY26. Motorcycles remain popular due to their fuel efficiency, cost-effectiveness, and versatility, while scooters have gained traction, especially among urban commuters," CareEdge said in a release. (ANI)