India’s two-wheeler retail market closed the calendar year 2025 with measured growth, supported by a strong year-end finish and improvements in buyer sentiment after the GST rate rationalisation in September 2025. Data released by the Federation of Automobile Dealers Associations (FADA) shows that two-wheeler retail figures stood at 2,02,95,650 units in CY2025, marking a 7.24 per cent year-on-year increase.
CY2025: A year split into two distinct phases
FADA’s data indicates that CY2025 played out as a “two-half” year across segments. The January to August period remained largely subdued, with buyers staying cautious ahead of purchases despite supportive factors such as tax relief measures and interest rates easing through the year. Dealer feedback suggests value consciousness and selective financing approvals in certain pockets, limiting conversion rates during this phase.
Momentum improved notably from September onwards, coinciding with GST 2.0. The rate rationalisation, which reduced tax incidence on mass-market two-wheelers up to 350cc, improved affordability and showroom sentiment. This led to a visible recovery in retail volumes through the September–December period, helping the segment close the year with a positive trajectory.
Urban two-wheeler retail numbers grew 8.20 per cent during the year, while rural markets expanded by 7.31 per cent, underlining steady demand across markets rather than a sharp, isolated rebound.
December 2025: Strong finish to the year
December 2025 proved to be a strong month for two-wheelers, with retail volumes reaching 13,16,891 units, up 9.50 per cent year-on-year. The segment benefited from the post-GST effect as well as year-end and festive offers.
Dealers also flagged that some customers made purchase decisions in advance due to concerns around higher prices in the new year, even as supply constraints and variant-level availability issues limited dispatches in select models.
A notable trend for the month was the upward trajectory of electric two-wheeler penetration. EVs now account for 7.40 per cent of total two-wheeler retail, compared to 6.13 per cent in December 2024. This growth was largely led by urban markets, where financing access and charging infrastructure remain stronger.
Outlook for early 2026: Cautious optimism
Dealer sentiment for January 2026 remains constructive. Around 70.48 per cent of dealers surveyed by FADA expect two-wheeler retail volumes to grow, although January is likely to be uneven. The first half of the month is typically softer, with demand expected to pick up after Makar Sankranti and Pongal, and continue into the marriage season.
Rural demand is expected to remain strong, aided by healthy rabi sowing progress and the near-completion of the kharif harvest, which should improve cash flows in hinterland markets. However, dealers remain cautious about execution-related factors, particularly finance approval turnaround times and the timely availability of in-demand models, which can directly influence conversion rates in the mass two-wheeler segment.
Overall, the two-wheeler market enters 2026 on firmer footing than it began 2025. While growth is expected to continue, dealers underline that outcomes will hinge on disciplined inventory management, faster finance processing and consistent supply. This is especially the case in high-volume commuter segments where affordability and availability remain the key decision drivers.
