The Indian two-wheeler industry is poised for steady growth, with a projected volume increase of 7-9% in FY25, slightly lower than the 9.8% growth achieved in FY24 as per CareEdge Ratings. This growth is expected to be fueled by higher sales of electric vehicles (EVs), driven by the Electric Mobility Promotion Scheme 2024, potential interest rate cuts in the latter half of FY25, robust demand for new models, a recovery in exports, and favorable monsoon conditions boosting rural consumer sentiment and income levels.
In FY24, the two-wheeler sector saw significant growth due to rising EV volumes and a diverse range of models and new launches. Despite initial setbacks in the first half of FY24 due to price increases post BS-VI Phase-II emission norms implementation, higher interest rates, and stressed rural incomes, the market rebounded in the second half thanks to festive demand and improved rural sentiment. The industry recorded robust double-digit growth in the quarters ending March 2024, with this trend continuing into April and May 2024.
In FY23, the Indian two-wheeler market achieved sales of 19.51 million units, marking an 8% increase from the previous year’s 18.01 million units. The momentum continued in FY24, with a 9.8% growth, totaling 21.43 million units, though still below the peak sales of 24.46 million units in FY19.
The domestic market saw a 13% growth in sales volume to 17.97 million units in FY24, while exports, despite a 5% decline due to challenges in African markets, showed signs of recovery. Notably, from January to May 2024, two-wheeler exports experienced double-digit growth, with February 2024 reaching a 19-month high of 0.33 million units. This positive trend is expected to persist into FY25.
The rise in EV demand significantly contributed to the overall growth. In FY23, EV sales hit approximately 0.73 million units, or 4.54% of total two-wheeler sales, reflecting a 188% year-on-year growth. This trend continued in FY24, with EV sales growing by 30% to over 0.94 million units. The shift towards EVs is driven by consumer preference for lower fuel costs, reduced maintenance, and government incentives like the FAME II program.
Segment-wise, motorcycles remain dominant, accounting for the majority of sales. While motorcycle volumes grew by 8% in FY24, scooter sales increased by 13%, a trend expected to continue in FY25. Entry-level motorcycles constituted 73% of total sales, with executive and premium segments showing significant growth.
CareEdge Ratings anticipates continued growth in FY25, driven by improved domestic sales, higher EV adoption, new CNG-powered models, and strong performance in the executive and premium motorcycle segments. According to Arti Roy, Associate Director at CareEdge Ratings, “We expect steady volume growth driven by multiple positive factors, including a recovering export market and favorable economic conditions.”
Hardik Shah, Director at CareEdge Ratings, added, “Post-COVID, two-wheeler sales have been on a recovery path since FY23, with momentum continuing into FY24. We foresee this trend persisting into FY25, bolstered by improved domestic demand and the rise of electric two-wheelers.”
