Rural rush, wedding boom, new bikes set stage for two-wheeler revival in FY26

Hero MotoCorp, Eicher Motors, and TVS Motors closed 3.2, 2.19, and 2.58 percent lower. The Nifty Index slipped over 2 percent as investors booked profit following a massive 4-day rally.

After a few quarters of slow growth, India’s two-wheeler industry is poised for a rebound in FY26, supported by a favourable mix of rural tailwinds, seasonal demand, new model launches, and a potential easing in borrowing costs.

The uptick is already visible in retail data. Two-wheeler sales in May rose 2.25 percent year-on-year and 11.8 percent sequentially, with much of the traction coming from rural India. A strong rabi harvest, healthy reservoir levels, and the Indian Meteorological Department’s forecast of an above-normal monsoon could lift rural incomes and sentiment. Dealer feedback indicates increased footfalls and enquiries from agrarian regions, FADA's May report stated.

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"FY26 is shaping up to be a pivotal year for the two-wheeler industry," Hero MotoCorp said in its latest analyst call, citing rural recovery and stable input costs among the key growth drivers. The company added that demand has remained strong during the ongoing wedding season, especially in rural markets where gifting two-wheelers is a popular tradition. It expects rural demand to remain ahead of urban demand through 2024, aided by government incentives, tax sops in the Union Budget, and overall macroeconomic stability.

While the OBD-2 emission norms have led to a roughly 2 percent price hike, Hero doesn’t see that derailing momentum. The company expects industry volumes to grow steadily and believes it is better placed than its peers to capture demand.

“We are confident of outperforming the industry,” it said, citing multiple growth levers. In the March quarter, Hero gained 600 basis points in market share in the entry-level segment and 250 basis points in the 125cc category—both critical for rural markets.

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TVS Motor echoed similar optimism. “The overall growth momentum in the domestic market is likely to be similar to last year,” said K.N. Radhakrishnan, Director and CEO of the company. While Q1 of FY26 may be moderate due to a high base, he expects demand to pick up from May and June, helped by the extended marriage season. A normal monsoon, infrastructure push, and potential repo rate cuts are also expected to support momentum through the year.

Analysts say relief may be around the corner. With inflation easing, the Reserve Bank of India is expected to cut interest rates and reduce borrowing costs in the coming months, which could improve two-wheeler loan affordability just as demand is picking up.

Premium players like Eicher Motors are also betting big on FY26. The maker of Royal Enfield motorcycles is counting on premiumisation, a strong brand, and an aggressive launch pipeline to fuel growth both in domestic and export markets. The company, which recently crossed annual sales of one million units, continues to dominate the mid-size motorcycle segment with an 88 percent market share.

“Premiumisation is continuing,” the management said in a recent call, adding that marketing spends and brand activations are helping expand the segment. Eicher expects strong domestic momentum, backed by a likely revival in urban demand due to tax cuts and steady rural offtake.

Hero MotoCorp, Eicher Motors, and TVS Motors closed 3.2, 2.19, and 2.58 percent lower, respectively. The Nifty Index slipped over 2 percent as investors booked profit following a massive 4-day rally.

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