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India's Two-Wheeler Market Shifts Gears: Premium Bikes & Scooters Drive Growth

A report by Yes Securities indicates India's two-wheeler industry is undergoing accelerated premiumization across both motorcycles and scooters. Scooterization has reached a peak penetration of 36%, signaling a lasting market shift. The demand for higher-displacement vehicles is strongest in metros and Tier-1 cities, driven by feature-rich offerings. This structural shift is expected to continue, reinforcing premiumization as a long-term trend.

Key Points: Premiumization Drives India's Two-Wheeler Industry Growth

  • Scooter penetration hits record high
  • Premium (>300cc) motorcycles are key growth engine
  • Sub-125cc segment share continues to decline
  • Urbanization and e-commerce boost demand
2 min read

Premiumization to drive India's two-wheeler growth as sub-125cc share declines: Report

Report highlights accelerated premiumization in India's two-wheeler market, with rising demand for higher-capacity scooters and motorcycles.

"We believe 2W industry to witness accelerated premiumization both within MC and scooters - Yes Securities Report"

New Delhi, January 6

India's two-wheeler industry is expected to witness accelerated premiumization across both motorcycles and scooters, driven by sustained upgrade demand, favourable pricing dynamics, and improving consumer sentiment, noted a report by Yes Securities.

"We believe 2W industry to witness accelerated premiumization both within MC and scooters with share of sub 125cc to continue decline," stated the report.

The report notes that scooterization hit a peak penetration of 36 per cent in YTDFY26, surpassing the earlier high of around 33 per cent and signalling a lasting market shift in favour of scooters. Adjusted for unreported electric two-wheeler volumes, scooter penetration stands even higher at 38.4 per cent, the report said. Scooter volumes have outpaced the broader two-wheeler industry, recording an impressive 4.1 per cent CAGR growth from FY20-25.

The report said, "a host of conducive factors including rapid urbanization, limited public transport options, notable segment inroads into under-penetrated states like UP, Bihar, MP, Rajasthan, and the East, besides the buoyant demand from e-commerce, deliveries, and 2W taxis," have boosted sales.

Premiumisation has emerged as the central growth theme across both scooters and motorcycles.

The report highlighted that demand for higher-displacement scooters has been strongest in metros and Tier-1 cities, where 125cc scooters command 45-50 per cent share, driven by feature-rich offerings and visible value upgrades.

Motorcycles, while subdued over the past four years, are also witnessing a decisive shift toward higher engine capacities. Premium motorcycles, particularly in the >300cc category, are emerging as a key growth engine, supported by aspirational demand and new launches.

"Upper premium segment (>300cc) should see huge volumes pull led by high upgrade base," the report said.

The 350cc segment has reached an all-time high share of 5.7 per cent in overall 2Ws and 36 per cent in premium motorcycles in YTD FY26, compared to just 2 per cent and 16 per cent, respectively, in FY15.

The report concludes, this structural shift will continue, leading to a gradual decline in sub-125cc segments and reinforcing premiumization as a long-term industry trend.

- ANI

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Reader Comments

S
Sarah B
While premiumization is a trend, I hope companies don't forget the price-sensitive customer in smaller towns and rural areas. Not everyone can afford a 125cc scooter or a 300cc bike. Affordable mobility is still crucial for India's growth.
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Vikram M
The shift to higher cc bikes is real among my friend circle. Everyone who started with a 150cc is now eyeing the 300-400cc range from Royal Enfield, KTM, etc. It's about status and the riding experience on weekend highway trips. Petrol cost is a concern, but the desire is stronger!
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Priya S
Scooters overtaking is no surprise. They are so much more practical for city runs, especially for women. Easier to manage in traffic, storage under the seat, and no gear hassle. My next upgrade from my Activa will definitely be to a 125cc model with more power.
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Rohit P
The report mentions e-commerce and deliveries boosting sales. Absolutely true! Look at all the Zomato/Swiggy and Amazon/Flipkart delivery partners. They need reliable, fuel-efficient but slightly more powerful two-wheelers. This is a huge segment driving volume.
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Michael C
Interesting data. The growth in states like UP and Bihar is significant. It shows rising aspirations and purchasing power beyond the metros. The two-wheeler is often the first major vehicle purchase for a family there, and they too are opting for better models now.

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