Two-Wheeler Sales Expected to Rise 6-9% in FY26, Tractor Demand Stays Strong: ICRA

New Delhi, Sep 23 – As per the Investment Information and Credit Rating Agency (ICRA), the two-wheeler sector of the nation is poised for a 6-9% annual growth in FY26. There are different reasons for the enhanced growth, including a higher-than-average monsoon, replacement demand, urban recovery, higher rural income, and the recent GST rate cuts that have further pushed the demand up.

Two-Wheeler Sales Outlook

The domestic wholesale volume of bikes and scooters in India increased by 7.2% (year on year) in August 2025. OEMs increased dispatches of final products ahead of the festive season. Retail sales grew only by 2.2%, as excessive rains and purchase deferments (due to the upcoming festive season and GST reforms) affected total sales. The agency underlined that demand momentum is expected to continue increasing over the next couple of months.

The electric two-wheeler segment also showed modest gains, with retail volumes reaching 1,04,725 units in August 2025, up 1.8 per cent sequentially. EV penetration continues to hold in the 6-7 per cent range.

Tractor Segment Riding on Monsoon Boost

The tractor industry also emerged as a standout performer, with wholesale volumes increasing by 28.2% (year-over-year) in August 2025. This took up the cumulative growth to 11.7% in the first five months of the current financial year. There was also a 30.1% rise in retail volumes for the month, driven by positive sentiments among farmers and adequate rainfall during the monsoon season.

ICRA projects tractor sales to expand 4-7 per cent in FY26, backed by the above-normal monsoon that has delivered 108 per cent of the long-period average rainfall till mid-September. The recent GST rate cut on tractors to 5 per cent is expected to further fuel demand during the festive season.

Emission Norms May Trigger Pre-Buying

The sector is also ready for the implementation of new and stricter emission norms (TREM V) from April 2026. With newer regulations in place, pre-buying is expected to increase, particularly in the tractor sector.

Overall, the outlook for both two-wheelers and tractors remains upbeat, with policy support, favorable monsoons, and festive demand likely to drive growth in FY26.

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