Premiumization Drives India’s Two-Wheeler Growth as Sub-125cc Segment Declines: Yes Securities
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New Delhi [India], January 6 : India’s two-wheeler industry is seeing rapid premiumization in both motorcycles and scooters, according to a Yes Securities report. Strong consumer upgrades, favorable pricing, and improving sentiment are fueling this trend.
Sub-125cc Segment Shrinks
The report notes that the sub-125cc segment will continue to lose market share. Consumers are now preferring higher-displacement scooters and motorcycles. As a result, premiumization is emerging as a key growth driver in the industry.
Scooter Market Growth
Scooter penetration reached 36% in YTD FY26, surpassing the previous high of 33%. When adjusted for unreported electric two-wheelers, penetration rises to 38.4%. Scooters outpaced the broader market with a CAGR of 4.1% from FY20-25.
Several factors support this growth:
- Rapid urbanization and limited public transport
- Expansion into under-penetrated states like UP, Bihar, MP, Rajasthan, and Eastern India
- Rising demand from e-commerce, deliveries, and two-wheeler taxis
Premium Motorcycles on the Rise
Demand for 125cc scooters is highest in metros and Tier-1 cities, where they hold 45-50% market share due to advanced features and value upgrades.
Motorcycles are also shifting toward higher engine capacities. Premium motorcycles in the >300cc category now drive growth, backed by aspirational demand and new launches. The 350cc segment reached 5.7% of total two-wheelers and 36% of premium motorcycles in YTD FY26, up from 2% and 16% in FY15.
Long-Term Trend
Yes Securities concludes that premiumization will continue. Sub-125cc models will gradually decline, while scooters and high-displacement motorcycles will dominate sales. This marks a structural shift in India’s two-wheeler market.
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