The financial year 2026 marked a turning point for India’s two-wheeler industry, which finally surpassed the pre-COVID peak after several years of gradual recovery. Two-wheeler retail sales came in at 21.42 million units during the year, growing 13.4% on a yearon- year basis, reflecting a steady return of demand across markets. The long-awaited recovery was unlocked by improved affordability, better rural cash flows and a wider range of products that catered to both entry-level buyers and more aspirational customers.

The first half of the year, from April to August, remained subdued, with most months recording low single-digit growth as consumers stayed cautious amid uncertainty around the proposed GST changes. Many buyers deferred purchases after indications that tax rates on vehicles could be reduced.

The momentum shifted in the second half. From September, demand strengthened as the GST revision improved affordability and lifted consumer sentiment, while the festival season further supported sales across segments. The competitive landscape also saw notable changes.

Hero MotoCorp retained its leadership position and TVS Motor emerged as the biggest share gainer among the top five manufacturers. In electric mobility, registrations rose 22% to 1.40 million units, with penetration increasing to about 6.5% of total two-wheeler sales, indicating a gradual but steady shift toward electrification despite temporary supply challenges. The year also marked a clear shift in the electric two-wheeler market, with leadership moving back to established manufacturers.

Hero Vs Honda

Hero MotoCorp maintained its leadership position in the domestic two-wheeler market during FY26 despite strong competition from Honda Motorcycle & Scooter India and managed to slightly widen the gap with the Japanese player in both retail and wholesale numbers.

The company dispatched 6.07 million units in the domestic market during the financial year 2026, compared with Honda Motorcycle & Scooter’s domestic sales of about 5.75 million units, giving Hero MotoCorp a lead of more than 300,000 units in the country’s largest two-wheeler market.

On the retail front, Hero MotoCorp’s retail sales came in at 6.08 million units, while Honda’s retail sales were at 5.36 million, 721,000 units lower than Hero MotoCorp. The gap between the two players, which more than halved to 655,000 units in the financial year 2025, saw an increase in FY26. The domestic market remains the backbone of Hero’s overall leadership, given the company’s strong dependence on the local market, unlike Honda, which has a strong export base.

The gap between the two companies in domestic dispatch volumes widened slightly in the financial year 2026 compared with around 286,000 units in the previous year, indicating a stabilisation in Hero MotoCorp’s performance after a period of pressure.

The rivalry between the two companies has intensified over the past few years, with Honda steadily closing the gap through consistent growth, particularly in scooters. However, Hero’s entrenched position in the commuter motorcycle segment has helped the company defend its leadership in the domestic market. The competitive landscape was more challenging for Hero MotoCorp in the previous financial years, with the Indian player losing its leadership to the Japanese player in a few months.

Hero’s sustained leadership in the domestic market was supported by continued demand for its commuter motorcycle portfolio, particularly the Splendor range, which remains a key contributor to volumes in rural and semi-urban markets. This was especially the case given that GST cuts gave a fillip to demand at the base of the pyramid.

The automaker has also been focusing more on the mid-size and premium segments to ride on the premiumisation trend, but has been met with limited growth in its electric mobility business, which added to its domestic dispatch momentum during the year. The expansion of Hero’s electric vehicle portfolio played a growing role in strengthening its domestic position.

Registrations of its electric scooter sold under the Vida brand nearly tripled during FY26, helping the company increase its share in the electric two-wheeler segment. The rapid growth in electric volumes provided additional support to overall domestic performance at a time when competition in conventional segments remained intense. Honda, meanwhile, continued to rely on its strong scooter portfolio to drive domestic sales.

The company remains a leading player in the scooter segment, though its earlier dominance has moderated as competitors such as TVS Motor Company and Suzuki Motorcycle India expanded their presence. This shift has created a more competitive environment in urban markets, where scooters account for a significant share of demand.

In commuter motorcycles, Honda continued to face headwinds against Hero’s deep-rooted dominance, which limited its ability to significantly alter the domestic market hierarchy despite expanding its entry-level product portfolio. Hero’s extensive dealer network and strong brand recall in rural markets continued to provide structural advantages in this segment.

E-2W Market

India’s electric two-wheeler market saw its registrations rise 22% year-on-year during FY26 to 1.40 million units. The growth rate moderated from the year-ago period rather than the sharp spikes seen in earlier phases of EV adoption, while penetration in overall sales increased. The growth reflects a wider spread of products across different price points, improved availability, and gradual consumer acceptance, particularly in urban and semiurban markets.

Unlike the earlier years, traditional ICE OEMs now hold more than half of the electric twowheeler market. TVS Motor emerged as the largest player in this segment, while Ola Electric, which was the market leader, fell to fifth place in sales. The moderation in growth compared with previous years suggests the market is entering a more stable, demand-led phase rather than one driven purely by subsidies.

The penetration levels continue to underline the gradual nature of the transition, accounting for around 6.5% of total two-wheeler sales in FY26, compared to 5.8% in the year-ago period. Industry participants say adoption is being supported by higher aspirational value, improved product quality and a broader choice of models, especially from established OEMs.

Pricing remains a key factor, with the narrowing cost differential between electric and ICE twowheelers influencing purchase decisions, particularly in the entry and commuter segments. TVS Motor emerged as the leader. Its registrations were at 340,758 units, marking a 43% year-on-year increase.

The company’s market share rose to 24.3% from 20.7%, reflecting steady scale-up in volumes and consistent demand. Bajaj Auto closed as the second-largest player with 288,866 units, recording 25% growth year-on-year. Its market share improved modestly to 20.6% from 20.1%, indicating stable expansion but at a slower pace compared to rivals.

Ather Energy and Hero MotoCorp emerged as the fastest-growing players among the top six in FY26. Ather’s registrations came in at 238,461 units, representing a jump of 82%, while its market share expanded sharply to 17% from 11.4%. Hero MotoCorp’s registrations almost tripled to 144,099 units. This rapid expansion helped the company increase its market share to 10.3% from 4.2%.

In contrast, Ola Electric saw a sharp decline in its sales during the year. Its registrations halved to 164,215 units and market share fell significantly to 11.7% from 29.2%, indicating loss of momentum in a highly competitive market. Greaves Electric rounded out the top six players, registering 61,641 units, a 51% increase year-on-year.

The company’s market share improved to 4.4%, gaining 85 basis points. Monthly momentum remained strong at the end of the fiscal. March 2026 registrations rose 45% yearon- year and 70% sequentially to 190,941 units, aided by year-end dispatches, dealer stocking and improved supply alignment. The sharp month-on-month jump also indicates that underlying demand remains intact, even as the market navigates changing dynamics.

The broader trend through FY26 points to a gradual shift in market dynamics, with established two-wheeler manufacturers such as TVS Motor, Bajaj Auto and Hero MotoCorp strengthening their presence. Their gains are being driven by stronger dealer networks, better brand value and service reach, which are increasingly becoming critical as the market matures.

Government subsidies under the PM E-Drive scheme, and earlier under the FAME programme, have played a key role in driving the adoption of electric vehicles. Subsidies for electric two-wheelers are now set to end in July. Several OEMs have said the industry is better prepared to sustain growth even without demand subsidies, as production volumes have increased and scale efficiencies have improved. 

Looking Ahead

Rating agencies and brokerages are forecasting mid-to-high single-digit growth for the domestic twowheeler industry going forward on the back of better affordability, new launches. Production plans of major OEMs indicate that competition in the domestic market will remain intense.

According to industry sources, Honda is targeting production of about 6.79 million two-wheelers in the financial year 2027, while Hero MotoCorp plans output of around 6.92 million units during the same period, about 200,000 units higher than Honda. TVS Motor, which surpassed Yamaha in 2025 to become the world’s third-largest manufacturer by sales volume globally, is now targeting double-digit growth in its two-wheeler production to 6.8–7.2 million units in FY27.

This production target would position TVS Motor to challenge Honda for the number two spot in India’s twowheeler market. However, growth estimates and production targets for next year were made assuming normal business conditions, up until the start of the war in West Asia.

If the war continues for a longer period, the demand and production numbers may change. Brokerages highlighted cost pressure for manufacturers following the surge in input costs across all commodities amid the West Asia war. Motilal Oswal noted that there are clear headwinds emerging for the automotive sector, given the ongoing geopolitical turmoil in West Asia.

“While most of the large companies are managing gas supplies at their end very well so far (as well as their supply chain), there is no certainty that they would continue to do so in the coming months if this situation persists,” said Motilal Oswal said in a report.

According to Equiris Securities, the Indian two-wheeler market is entering a more stable growth phase, aided by replacement demand, better affordability following GST reductions and rising electrification, particularly in scooters, with the product mix gradually shifting toward scooters and electric vehicles over time.

“We expect domestic 2W volumes to grow ~6% CAGR over FY25–FY30E, supported by replacement recovery and rising penetration, before moderating structurally over the long term as electrification reshapes the industry mix,” the investment banker said.