Two-Wheeler Volumes Likely To Jump 7–9% In FY27, Mainly Driven By Domestic Demand: Crisil Report

New Delhi, Feb 20 (KNN) India’s two-wheeler industry is projected to grow 7–9 per cent in fiscal 2027, with volumes reaching around 29 million units, according to a Crisil report. 

The domestic market will remain the main growth driver, supported by improved affordability post-GST rationalisation, while exports are expected to outpace domestic growth for the third consecutive year.

According to the report, the revenue growth is expected to largely be volume-led, with premiumisation providing incremental support. Operating margins are expected to hold around 16 per cent, as operating leverage offsets higher commodity costs. Strong profitability should fund planned capital expenditure of ~Rs 6,000 crore in FY27 while maintaining low leverage and resilient credit profiles.

Domestic Market: Stable Momentum

Analysis of six major OEMs, accounting for 95 per cent of industry volume, shows steady expansion. Fiscal 2026 saw a slow first half followed by recovery from September after GST cuts lowered prices 7–8 per cent. 

Rural demand benefited from a strong kharif crop and rising farm income, while urban demand improved post-tax revision. Soft interest rates and easing inflation further supported growth.

Anuj Sethi, Senior Director, Crisil Ratings, said, "In fiscal 2027, we expect domestic two-wheeler volume to grow 6-8 per cent, broadly in line with the current fiscal.” 

Sethi added, “Motorcycles, which account for about 60 per cent of domestic volumes and remain the largest segment, are likely to see mid-single-digit growth, reflecting a mature commuter base and stable rural demand. Incremental growth is expected to come from scooters - early double-digit overall and mid-teens for e-scooters -driven by rising urban usage, increasing female participation, and expanding last-mile mobility needs, thereby gaining share in the overall mix."

Premiumisation Gains Pace

Motorcycles have rebounded strongly post-GST. Entry-level 125cc models still dominate (~73 per cent), but the 150–350cc segment has grown from 23 per cent in FY25 to 25 per cent this fiscal, reflecting rising affordability and premiumisation. The premium segment remains small.

The proposed India–US trade agreement may create opportunities for motorcycles above 500cc, but as this segment is <1 per cent of total volume, the broader industry impact will be limited.

Exports: Strong Growth Driver

Poonam Upadhyay, Director, Crisil Ratings, noted, "Two-wheeler exports are expected to remain a strong growth driver. Volume is likely to rise 21-23 per cent this fiscal and sustain mid-to-high teen growth in fiscal 2027, reflecting steady traction in overseas markets.”

She also stated that Latin America, Africa, and South Asia, accounting for ~90 per cent of export volume, will anchor this expansion, supported by wider distribution, stronger dealerships, and commuter-focused products.

Financial Outlook

Combined domestic and export growth is expected to drive 10–12 per cent revenue growth in FY27, following an estimated 15–17 per cent in FY26. Margins are projected to remain around 16 per cent despite high aluminium and steel costs. Healthy profitability will fund capex while keeping capex intensity below 0.4 times.

Future growth will depend on rural and urban incomes, commodity price trends, and export market recovery, which will be critical for volume visibility, the report concluded.

(KNN Bureau)