New Delhi [India], October 15 : India's domestic two-wheeler (2W) market is heading towards a structural stagnation even as electric two-wheelers (E-2Ws) accelerate on a secular growth path, noted a research report by Emkay Global Financial Services.
The brokerage expects that after a brief, policy-driven boost in demand, the conventional internal combustion engine (ICE) two-wheeler segment will enter a period of subdued expansion. "We expect the domestic 2W industry to stagnate at 3% CAGR over FY26E-35E. This is likely to coincide with the secular customer-preference shift toward E-2Ws, with volumes expected to rise 13-15x over FY25-35E," noted the report.
Following the near-term GST cut-led demand spike, the sector is expected to lose momentum as the effects of policy normalisation and market saturation set in. The report says domestic 2W growth is likely to reach a natural ceiling, with limited headroom for incremental volume expansion beyond FY26.
The report further adds, "After the near-term GST-cut led demand spike, we expect the domestic 2W industry to stagnate at 3% CAGR over FY26-35E."
As per the report, India's 2W industry has matured, with penetration levels in urban and semi-urban markets nearing saturation. Demand recovery from rural areas remains patchy, and affordability constraints continue to weigh on entry-level 2W sales.
The report says the next phase of growth will come from electric two-wheelers, E-2Ws are poised for explosive growth over the next decade. "We expect E-2Ws to grow 13-15x in 10Y, while ICE-2W volumes would nearly halve from current levels over the same period," the report stated.
The report says it underlies a fundamental shift in consumer preferences toward greener, cost-efficient mobility solutions.
Emkay attributes this rapid growth to multiple tailwinds, which include falling battery prices, policy incentives such as FAME-II subsidies, expanding charging infrastructure, and increasing consumer confidence in EV technology.
The report notes that while the transition will take time, the pace of adoption is likely to accelerate as OEMs expand product offerings and as operating economics increasingly favour electric options.
The shift is expected to have far-reaching implications for the auto and auto ancillaries sectors, compelling manufacturers and suppliers to reorient their strategies toward EV-centric portfolios.
Overall the report paints a mixed outlook for the domestic two-wheeler market, steady stagnation for ICE models and exponential growth for electric vehicles, the coming decade is likely to mark the most profound realignment in India's 2W industry.