Fueling the Future: The Resilience and Rise of India’s...

2W Sales Slowdown Meets Financing Surge, NBFCs’ Role in 2W Financing, Major 2W Players’ Performance and Strategies, New Developments: EVs, Digital Lending, and Policy Boosts, Asset Quality Pressures and Cautious Outlook, Road Ahead: Steady Growth with Rural Revival

The Resilient Growth of India’s Two-Wheeler Industry

India’s two-wheeler (2W) market continues to show strong growth and resilience, despite some recent sales moderation. Dominated by motorcycles, followed by scooters and mopeds, the industry is witnessing a shift toward “premiumization,” where buyers prefer higher engine capacities and more aspirational bikes. The rapid rise of electric two-wheelers (e-2Ws), backed by government incentives and increased consumer awareness about the environment, marks a transformative trend in the market. The overall industry size was valued at USD 28.84 billion in 2025 and is projected to grow to USD 37.30 billion by 2030, at a compound annual growth rate (CAGR) of 5.28%. Key drivers include strong government support for electrification, recovering exports, broader digital retail channels, urban demand for agile transportation, increasing rural incomes, and expanding logistics services.

Volume Growth and Emerging Trends

Over the last three years, the Indian two-wheeler market recorded healthy volume growth of 8%, 10%, and 11% in FY23, FY24, and FY25, respectively. FY25 volumes benefited from a significant 21% rebound in exports and a 9% increase in domestic sales. Export growth was powered by stabilisation in key overseas markets following previous disruptions caused by inflation, high interest rates, and currency issues. Domestically, rural demand surged while urban sales remained robust.

Looking ahead, CareEdge Ratings forecasts that the industry will exceed pre-pandemic sales levels by FY26, with expected volume growth of 8-9%. Macro tailwinds such as easing inflation, a full income tax rebate for individuals earning up to Rs 12 lakh annually, recent repo rate cuts, and a reduction in GST from 28% to 18% for motorcycles and scooters up to 350cc are expected to further improve consumer affordability and sentiment. Although factors like a high base effect and new emission norms (OBD-II Phase-B) may temper growth slightly, the overall outlook remains favourable.

Segment Breakdown and Growth Patterns

The 2W market is divided into motorcycles, scooters, and mopeds, with a respective share of 62%, 35%, and 3%. The scooter segment posted strong double-digit growth for the third consecutive year, recording a 26% increase in sales for the year ended March 2025. Scooters have gained popularity primarily among urban commuters, while motorcycles remain favoured for fuel efficiency, economy, and versatility.

Within motorcycles, the entry-level category grew by 8% in FY25, while executive and premium motorcycle segments grew at faster rates of 12% and 10%, respectively. Entry-level motorcycles still form 72% of total sales, but the growing volume of premium and executive models is diversifying the market. Despite volumes not fully reaching FY19 peak levels yet, premiumization reflects a maturing consumer base that values higher performance and features along with basic models.

2W Sales Slowdown Coupled With Financing Growth

Though two-wheeler sales expanded at a CAGR of 9% from FY21 to FY25, growth normalised to 8% in FY25 due to a high comparison base, weak rural demand, and cautious NBFC lending stemming from concerns over borrower indebtedness. In Q1 FY26, sales stood at 4.8 million units, up 5% YoY, with seasonal factors accounting for slower-than-usual performance early in the fiscal year. According to CareEdge Ratings, overall FY26 growth is anticipated to hover around 6-7%, boosted by improved rural incomes thanks to a good monsoon and the GST rate cut.

The Rising Dominance of NBFCs in Two-Wheeler Financing

The financing sector for two-wheelers has grown quickly, achieving a 16% CAGR since 2021 and amounting to Rs 1.64 lakh crore by March 2025. Non-Banking Financial Companies (NBFCs) dominate this market by focusing on underbanked segments, leveraging faster approvals and disbursals, and handling higher-risk borrowers with minimal documentation. Captive NBFCs linked to OEMs contribute about 20% of the total 2W financial disbursements through streamlined access.

Average loan sizes have risen from Rs 86,111 in FY21 to Rs 1,14,929 in FY25 due to inflationary pressures, increased ownership costs owing to tighter emission regulations, and consumers opting for costlier premium models. The proportion of two-wheelers priced over Rs 1,50,000 within total disbursements climbed from 6% in FY21 to 15% in FY25, fueled by consumers’ growing discretionary spending power. NBFC disbursements expanded at a 25% CAGR over the past 4 years to Rs 74,948 crore in FY25, but moderated to 11% growth in FY25 due to tighter credit standards amid concerns about asset quality.

Despite the cautious approach, NBFCs’ 2W financing is expected to sustain growth at 18-19% in FY26, helped by improving rural demand and favourable GST tax changes.

Major 2W Players’ Performance and Strategies

Bajaj Auto Limited– Bajaj Auto is a leading Indian multinational in 2Ws and 3Ws, ranked third in the domestic motorcycle market and the largest Indian exporter of 2Ws. In FY25, it held a 16.6% domestic motorcycle market share and a 46.2% export share, contributing about 45% of India’s total 2W and 3W exports. With a diversified portfolio spanning economy (CT, Platina), executive (Pulsar, Dominar) and premium motorcycles (KTM, Husqvarna, Triumph), BAL has a strong presence across segments. In line with the industry’s shift toward electrification, it has expanded into the e-2W space with the Chetak brand, emerging among the top three players in FY25, supported by a ~125% YoY rise in e-2W volumes (billing basis). In Q2 FY26, BAL’s revenue from operations rose 19% YoY to Rs 15,734.74 crore, while net profit increased 53% YoY to Rs 2,122.03 crore. In November 2025, Bajaj Auto’s 2-wheeler sales stood at 379,714 units, up 3% from 368,076 units a year earlier.
Hero MotoCorp Ltd– Hero MotoCorp remains the market leader in the Indian 2W industry, reporting global sales of 5.9 million units in FY2025 and a ~29% domestic market share. It continued to dominate the motorcycle segment with ~43% share and ranked among the top four scooter OEMs with a ~6% share. Strong brands such as Splendor, HF Deluxe, and Passion, together contributing ~80% of entry-level motorcycle volumes in FY2025, reinforce its leadership position. The company is focused on strengthening its presence in premium motorcycles, scooters, and e-2Ws. In November 2025, Hero MotoCorp recorded dispatches of 604,490 units, up 31% YoY. Its EV arm, VIDA, maintained strong growth with 12,199 VAHAN registrations, up 66% YoY, securing a 10.4% market share. In Q2 FY26, revenue from operations increased 17% YoY to Rs 12,218.39 crore, while net profit rose 24% YoY to Rs 1,320.98 crore.
TVS Motor Company Ltd– TVSM is a leading player in the two-wheeler industry and the only company with a presence across motorcycles, scooters, and mopeds in both domestic and international markets. It remains the major moped manufacturer in India. The company has also emerged as the second-largest player in the high-speed e-2W segment, with market share rising to 21% in FY25 from 4% in FY22. Its portfolio includes the Apache series (RTR, RR 310), TVS Sport, Radeon, TVS Raider, Ntorq, Jupiter, the electric models iQube and TVS X, and the XL100 moped. Recent launches include the premium TVS Apache RTX 300 and the electric scooter TVS Orbiter. At EICMA 2025, TVS announced an aggressive European expansion with plans to introduce six new ICE and EV models. In November 2025, TVS Motor recorded sales of 519,508 units, up 30% YoY. Total 2W sales grew 27% to 497,841 units, while EV sales rose 46% to 38,307 units. In Q2 FY26, revenue from operations increased 25% YoY to Rs 14,051.22 crore, while Net Profit rose 42% YoY to Rs 832.76 crore.
Eicher Motors– Eicher Motors, through Royal Enfield (RE), maintained an 84% share of India’s mid-size motorcycle segment in H1 FY26. RE’s >125cc market share rose to 32.2%, while its overall domestic motorcycle share stood at 8.3%. Globally, the brand held an 8% share in the Americas, 9% in APAC, and 9% in EMEA in the middleweight segment in FY25. Its portfolio includes the Bullet, Classic, Hunter, Meteor, Super Meteor 650, Himalayan, and Scram. At EICMA 2025, RE unveiled the Bullet 650, Classic 650 125th Anniversary Edition, Himalayan Mana Black Edition, a limited Shotgun 650 x Rough Crafts collaboration, and the Flying Flea scrambler. In November 2025, Royal Enfield recorded sales of 1,00,670 motorcycles, up 22% YoY from 82,257 units. Exports rose to 10,265 units from 10,021 units. In Q2 FY26, revenue from operations increased 45% YoY to Rs 6,171.59 crore, while net profit grew 24% YoY to Rs 1,369.45 crore.
Ather Energy– Ather Energy, founded in 2013, is an Indian EV manufacturer known for high-performance, smart electric scooters and its proprietary public charging network, Ather Grid. Its portfolio includes the 450 series (450S, 450X, 450 Apex) and the family-oriented Rizta. The company’s national E2W market share rose to 17.4% in Q2 FY26, up from 12.1% a year earlier. Ather has expanded its retail footprint to 524 Experience Centres (ECs) and is targeting 700 ECs by Q4 FY26. Its market share stands at 25% in South India, 14.6% in Middle India and 10% in the rest of India. To enhance affordability, Ather introduced a Battery-as-a-Service (BaaS) model and launched a higher-range 450S with a 3.7kWh battery. It sold 111,673 units in H1 FY26, up 78% YoY from 62,731 units. In Q2 FY26, revenue from operations grew 54% YoY to Rs 898.9 crore, while Net Loss narrowed to Rs 154.1 crore.

New Developments: Electrification, Digital Lending, and Policy Support

The push for electric two-wheelers (E2Ws) is strong, driven by lower fuel and maintenance costs that make the total cost of ownership competitive with petrol variants. E2Ws accounted for around 1.20 million sales in FY25, after rapid growth rates exceeding 180% two years prior. Government initiatives such as FAME-II and PM E-DRIVE laid the foundation for adoption, but the current focus is on building a self-sustaining ecosystem with reduced subsidies, better charging infrastructure, and cost control.

Simultaneously, digital lending platforms have revolutionised 2W financing, enabling faster, paperless loan approvals and disbursals through mobile applications, making financing more accessible, especially to first-time borrowers.

Asset Quality and Lending Caution

Despite positive volume and financing trends, asset quality concerns are rising within NBFC 2W loan portfolios. Gross Non-Performing Assets (GNPAs) increased to 3.7% as of March 2025, from 3.1% a year earlier. Delinquency rates in 31-90 days past due buckets are climbing, and on-time payments dropped by nearly 3 percentage points to 86.8%. This has led lenders to adopt a more cautious approach, focusing on better-credit-quality borrowers.

The Road Ahead: Balanced Growth Supported by Rural Revival

Although sales growth might moderate in the short term due to a high base and regulatory changes, strong export demand and rising EV adoption will keep overall industry volumes increasing steadily. Emission norm upgrades (OBD-II Phase-B) should have a limited market impact. Executive and premium motorcycles are expected to remain a key growth driver in FY26.

Rural demand revival, helped by a favourable monsoon and improving incomes, alongside easing inflation and GST reductions, will support this growth phase, continuing India’s journey toward becoming a global two-wheeler leader.

Written By Adhvaitha Nayani BA

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