TVS Motor Company has expressed strong optimism about the growth trajectory of India’s two-wheeler (2W) industry, projecting 15% volume growth in the fourth quarter of the financial year and around 9% growth for FY26 as a whole. According to KN Radhakrishnan, CEO and Director of TVS Motor, the sharp rebound witnessed in Q3 following the GST reduction has fundamentally altered the industry’s momentum, with favourable macroeconomic conditions expected to sustain demand through the March quarter.
Speaking to investors after the company’s Q3 FY26 earnings, Radhakrishnan highlighted that the post-GST demand surge, combined with strong rural fundamentals and improving credit availability, has created a solid foundation for continued growth. TVS Motor, he added, aims to outperform overall industry growth in the coming quarter.
GST Cut Sparks Strong Demand Revival
The Indian two-wheeler market saw a notable turnaround in the December quarter, largely driven by the reduction in GST rates, which lowered upfront vehicle costs and boosted consumer sentiment. According to Radhakrishnan, this policy change helped the industry record nearly 20% growth in Q3, marking a sharp recovery after a muted first half of the fiscal year.
“In Q3, post the GST reduction, the industry grew by almost 20%,” he said. “This momentum has changed the growth trajectory for the second half of the year.”
He expects this trend to continue into Q4, with industry volumes likely to expand by 15% or more, supported by sustained demand across both urban and rural markets.
Rural Demand Strengthened by Rabi Outlook
One of the key pillars supporting the two-wheeler market is the improving rural outlook. Radhakrishnan pointed to healthy monsoon rainfall, higher reservoir levels, and strong rabi sowing as positive indicators for rural incomes and consumption.
“The rainfall has been good, and higher reservoir levels are encouraging increased rabi sowing,” he noted. “This will definitely support rural sentiment and purchasing power.”
Rural markets, which are critical for entry-level motorcycles and scooters, showed growth of nearly 19% in Q3, reflecting rising confidence among agricultural households. This broad-based recovery suggests that demand is not limited to specific regions or product categories.
Urban Markets Also Show Robust Recovery
Urban demand has also remained resilient, with growth of approximately 21% in Q3, indicating renewed consumer confidence in cities. Improved employment sentiment, stable inflation, and festive-season buying contributed to higher showroom footfalls.
The parallel recovery in both urban and rural markets underscores a healthier demand cycle, reducing the risk of a short-lived rebound and increasing confidence in sustained growth into FY26.
FY26 Growth Seen at Around 9%
Despite the strong second-half recovery, overall growth for FY26 is expected to moderate to around 9%, primarily due to the weak performance in the first half of the year, when industry volumes grew by only about 2%.
“For the full year, because the first half was not great, you will see growth of around 9%,” Radhakrishnan said, adding that the industry is likely to exit the year with a strong run rate heading into FY27.
Easier Credit and Rate Cuts Aid Momentum
Another major tailwind for the two-wheeler sector is improving access to finance. Radhakrishnan highlighted the Reserve Bank of India’s cumulative 125 basis points of interest rate cuts, which have eased borrowing costs and improved liquidity for vehicle loans.
Better financing availability, especially for first-time buyers and rural customers, is expected to further support demand in the coming months.
TVS Motor Targets Outperformance
TVS Motor remains confident of outperforming the broader industry in Q4. The company is seeing strong traction in scooters and premium motorcycles, along with improving electric vehicle (EV) volumes as supply-side constraints gradually ease.
Additionally, international markets such as Africa and Latin America are showing signs of recovery, providing incremental growth opportunities. The company also expects higher volumes, premiumisation, and ongoing cost-efficiency initiatives to support profitability.
“With top-line growth, we will unlock scale benefits,” Radhakrishnan said, reiterating confidence in margin expansion despite a competitive market environment.
Outlook Remains Positive
Overall, TVS Motor believes that the combination of policy support, rural strength, easier credit conditions, and improving global markets will keep the two-wheeler industry on a positive growth path through the end of FY26.
“Like Q3, you can expect good growth in Q4 as well,” Radhakrishnan concluded. “We are very confident that this momentum will continue, and TVS will do better than the industry.”