Credit rating agency ICRA has projected 3-5% year-on-year growth in domestic two-wheeler wholesale volumes for FY2027, according to a domestic market report released on Wednesday. While demand continues to be supported by structural regulatory reforms and healthy replacement cycles, overall growth momentum for the fiscal is expected to be constrained by a high statistical base and a weak monsoon forecast. The industry commenced the new fiscal on a strong note, with domestic wholesale volumes jumping 29% Y-o-Y in April 2026 to reach 1.9 million units.
According to ICRA's report, real-time retail demand grew at a more moderate but healthy pace of 13% Y-o-Y during April 2026. On-the-ground sales were driven by lower-than-expected manufacturer price hikes, stable rural income flows from recent agricultural output, and a late wedding season that extended until mid-May. The agency attributed the sharp wholesale spike primarily to improved vehicle affordability following the implementation of recent GST 2.0 rationalisation measures.
The electric two-wheeler ecosystem continued its steady upward trajectory, posting robust 68% Y-o-Y retail growth in April 2026, with 154,337 units sold. With this surge, e2W penetration within the broader two-wheeler market climbed to 8% for the month, up from the 21.9% Y-o-Y full-year volume expansion recorded over the entirety of FY2026. The rating agency noted that expanding product portfolios and improving total cost of ownership (TCO) parity are driving deeper consumer acceptance.
On the international front, monthly export volumes registered a substantial 38% Y-o-Y increase in April, building on the 23% growth achieved during FY2026. This comes despite persistent macroeconomic headwinds in several major overseas destinations. However, ICRA flagged significant downside risks, including an El Niño-led weak monsoon forecast that could hamper rural recovery in subsequent quarters, while domestic input-cost inflation remains a challenge.
Crucially, the ongoing conflict in West Asia remains a primary threat to supply chains, with the potential to trigger commodity price inflation and disrupt export shipments in the coming months. The rating agency emphasized that these factors could significantly impact the industry's growth trajectory despite the positive domestic demand fundamentals. As per ICRA, power and fuel costs constitute 50-55% of total operating costs for cement manufacturers, making them particularly vulnerable to crude oil price volatility.
