Indian Industry Plus A Pratisrutiplus Suppliment
In September quarter of 2025 year, two-wheeler sales volume rose to 9 per cent year-on-year with exports surging to 30 per cent. Bajaj Auto and the Hero MotoCorp were the leading sellers expanding 13 per cent revenue in second quarter of 2025 on y-o-y basis. Total two-wheeler sales in India crossed 20 million in 2025 calendar year.
The GST 2.0 rollout in late 2025 had a substantial impact on sale of different brands of two-wheeler vehicles in India. The GST was reduced by the Government of India from 28 per cent to 18 per cent slab on two-wheelers ranging capacity up to 350cc. This has become more affordable to customers, especially for first time buyers and it also prompted existing users to advance for new ones. The timing of GST cut (Navratri and Diwali period) was favorable enough to create high demand resulting in record sales during second quarter of 2025 calendar year. In September quarter of 2025 year, two-wheeler sales volume rose to 9 per cent year-on-year with exports surging to 30 per cent. Bajaj Auto and the Hero MotoCorp were the leading sellers expanding 13 per cent revenue in second quarter of 2025 on y-o-y basis. Total two-wheeler sales in India crossed 20 million in 2025 calendar year with a significant recovery of 5-7 % growth over previous year. Scooters played a leading role in segment growth, with TVS motor and Suzuki posting strong double-digit growth. Similarly, Royal Enfield’s annual sales were expected to cross I million units in 2025 calendar year.
The two-wheeler market is expected to grow in 2026 CY at 6 to 9 per cent rate because of its affordability (due to GST cut) and increased demand due to replacement purchase by urban youths. It is expected that the first half of the year may go smoothly with positive impact of GST cut, but it may fade away in later part of the year. Further, there may be some negative impact on the sale of two-wheelers up to 125 cc due to implementation of proposed ABS system while the sale of higher version up to 350 cc may not be affected.
The market structure of two-wheeler industry shows that vehicles up to 125 cc constitutes to two third of total sales, mainly because of its affordability to customers. The proposed mandate for having anti-lock braking system (ABS) by the Government will be a bottleneck as the cost of the system may be in between Rs 2000 to Rs 5000 per unit which may wipe out their benefit arising previously due to reduction in GST. Manufacturers have raised their concern to government saying that the proposed ABS system may not be effective for vehicles up to 125 cc so far as safety aspect is concerned. It is also believed that the incremental cost due to ABS system will be significantly lower than the benefit customers receive due to GST cut in addition to safety measures. However, Government has not issued any dateline for its implementation so far.
During the first half of the CA 26, the demand will be good because of favorable base due to impact of reduction of GST during last year. The second half may be different as the impact of GST reduction may fade away from the mind of customers by then. Further, the regulatory provision for ABS system, if implemented, may add to the worry of sellers. As per analysts, things may not worsen much because of few strong reasons like increased affordability due to GST reduction, strong rural demand and newer replacement demand in urban area. Rural market consisting of 55 to 60 % of total sale, remains strong with expectations of good Rabi crop. At the same time, urban demand will also be favorable due to improved affordability and replacement demand. Electric two wheelers are also expected to penetrate the market and acquire some sale too. Moreover, reduced costs and launching of few new models during the year will increase buyer confidence in both urban and rural areas. Hence, it is expected that the overall growth during CA26 will be in between 6 to 8 per cent after factoring all these issues including the regulatory issue. Hence, there is a positive mood among buyers which will boost the sale of two wheelers in 2026 CA also.
