Automotive Market Research, Motorcycle Market research

The Anniversary Test: India’s Two-Wheeler Festive Season One Year After the Tax Cut

by Francis Rozange | Nov 7, 2026 | 0 comments

On 21 October 2026, the day after Dussehra, India’s dealers’ federation published its count of the ten days of Navratri. Between 11 and 20 October, registration offices across the country recorded 1,123,086 new vehicles, of which 834,075 were two-wheelers. The headline drew attention to a gain of close to 27 percent over Navratri 2024, and two-wheelers alone were up 32.41 percent on that comparison. The same table carried a second column that received less attention. Against Navratri 2025, total retail was down 6.52 percent, two-wheelers were down 2.79 percent and passenger vehicles had fallen by 21.91 percent, a drop of more than a fifth.

Both comparisons are accurate, and the gap between them is the story of the 2026 festive season. Navratri 2025 began on 22 September 2025, the very day India’s reformed goods and services tax took effect, and it ran for eleven days rather than ten. A year later, the industry is measuring itself against a festive season that coincided with a ten-point cut in the tax rate on most two-wheelers. Diwali falls on 8 November 2026, so the decisive weeks have not yet been counted. What follows reads the evidence available before then: the tax change itself, the September and Navratri data, the stock in dealers’ yards, and the headwinds that were absent in 2025.

What the tax council changed in September 2025

The GST Council’s 56th meeting, held in New Delhi on 3 September 2025, recommended replacing the four-tier rate structure with a standard rate of 18 percent and a merit rate of 5 percent, plus a special de-merit rate of 40 percent for a select list of goods. For the vehicle market the consequences were specific. Motorcycles with an engine capacity of 350cc or less, under a tariff heading that also includes mopeds, moved from 28 to 18 percent, as did small cars, three-wheelers, buses and trucks. Parts and accessories for two-wheelers and new rubber tyres were also cut from 28 to 18 percent, which matters for running costs as well as for the showroom price. The Council fixed implementation for 22 September 2025.

The arithmetic of the cut is simple. If the full reduction is passed to the buyer, a price that includes tax at 28 percent falls by about 7.8 percent when the rate drops to 18 percent, because 1.18 divided by 1.28 is roughly 0.92. Two other provisions shaped the market in less obvious ways. Motorcycles above 350cc moved the other way, from 28 percent into the new 40 percent band, which created a sharp tax boundary in the middle of the enthusiast segment. Electric vehicles, which had carried a 5 percent rate since a Council decision in 2019, were left where they were. The petrol scooter and the commuter motorcycle became cheaper overnight, while the electric scooter’s relative price advantage narrowed.

A festive window that opened on the day of the reform

The months around the reform were distorted in both directions. FADA’s September 2025 release described the first 21 days of that month as largely muted, with buyers holding back for the new rates, followed by a surge once they applied. Two-wheeler retail for the whole of September 2025 was reported at 1,287,735 units, up only 6.51 percent. October then delivered the strongest month in the federation’s records: 3,149,846 two-wheelers, up 51.76 percent on October 2024, with rural registrations up 65.90 percent against 33.91 percent in cities. Dussehra and Diwali both fell in October 2025, so the month absorbed the pent-up demand from September, the tax cut and two of the year’s busiest buying occasions at once.

The surge emptied the channel rather than simply filling order books. Business Standard, reporting ICRA’s figures, put October 2025 retail at 3.15 million two-wheelers while domestic wholesale dispatches rose only 1.5 percent to 2.1 million, which means dealers sold far more than manufacturers shipped to them that month. November 2025 retail then fell 3.1 percent year on year, a decline FADA attributed to festive registrations having been completed in October. Over the full financial year to March 2026, two-wheeler retail reached 21,420,386 units, up 13.40 percent, and FADA said the segment had finally surpassed its pre-pandemic peak. The question for 2026 is how much of that step was permanent.

Reading Navratri 2026 against two different years

FADA defines Navratri as the period from the first day of the festival to Dussehra. In 2026 that window ran from 11 to 20 October; in 2025 from 22 September to 2 October; in 2024 from 3 to 12 October. The 2026 release shows 834,075 two-wheelers against 858,027 in 2025 and 629,909 in 2024. Readers who compare these numbers with those published in 2025 will notice revisions: in October 2025 the federation reported 835,364 two-wheelers for Navratri 2025, while its 2026 release gives 858,027 for the same period. Late registrations are added as they arrive, which is one reason to treat any single festive figure as provisional for several weeks.

Two adjustments make the comparison more useful. Dividing each period by its number of days, two-wheeler registrations averaged about 83,400 a day in Navratri 2026 against about 78,000 in Navratri 2025, an increase of roughly 7 percent, while passenger vehicles fell by about 14 percent a day. The two-year gain of 32.41 percent over 2024 is equivalent to roughly 15 percent a year compounded. Neither calculation removes the timing problem entirely, because registrations lag purchases and the tax change drew forward demand into the 2025 window. They do suggest that two-wheeler demand in the 2026 Navratri was firmer than the raw decline implies, and that the weakness in the festive figures lay mainly in cars.

Why two-wheelers held up better than cars

The contrast between the two segments is the most informative part of the Navratri table. Two-wheelers were close to flat against an exceptional base, while passenger vehicles lost more than a fifth of their volume. Part of the explanation lies in what happened to cars in 2025. FADA reported then that compact and sub-four-metre cars saw a strong resurgence as reduced tax rates widened the buying base, and that retail momentum exceeded supply for several models. Much of that deferred demand appears to have been satisfied in a single season. By September 2026, by contrast, passenger vehicle inventory had risen to an estimated 43 to 45 days, well above the 21 days the federation recommends, a sign that car supply was running ahead of demand.

Two-wheelers rest on a different kind of demand. In its August 2026 release, FADA described the non-farm rural economy of livelihood mobility, goods movement and construction as the segment that kept accelerating even as farm-linked purchases softened. For a household that uses a motorcycle to reach work, deliver goods or carry produce, the purchase is closer to equipment than to discretionary spending, and the festive date often decides only when it is registered. The federation’s own explanation for September’s two-wheeler strength pointed in the same direction: festive buying in the first half of the month, steady rural and semi-urban demand, a pull towards premium motorcycles and accelerating electric adoption.

September’s record and the base it was measured against

September 2026 produced the figure that travelled furthest. Two-wheeler retail reached 1,790,188 units, up 33.08 percent year on year and 4.41 percent above August, the best September in FADA’s series and 15.3 percent above the previous September peak, set in 2018. Total retail across all categories was 2,536,920 units, up 31.82 percent. FADA’s president urged that the headline be read with discipline, describing it as the most base-distorted print of the year because buyers had deferred purchases in the weeks before the reform took effect in 2025. In the 2026 release, the September 2025 two-wheeler base appears as 1,345,153 units, again higher than the figure first published.

The cleaner signals are elsewhere in the same document. Two-wheeler retail for the first half of the financial year, April to September 2026, was 11,043,407 units, up 20.43 percent. Across all categories, FADA said that the first five months of the financial year, April to August, which exclude the distorted September comparison, grew by about 17 percent, and it called that the truer underlying run rate; its August release had put the same five-month gain at 18.47 percent. A month earlier, the federation had noted that August 2026 was the first genuinely new August peak for two-wheelers since 2018, which it described as a recovery to trend after an eight-year round trip. The market has regained its old ceiling. Whether it is building a new one is what the coming weeks will show.

The October comparison will flatter no one

FADA’s September release presented October 2026 as the first month to offer a clean comparison, since the anniversary of the tax change had passed. The festival calendar complicates that claim. October 2025 contained both Dussehra and Diwali, and produced 3,149,846 two-wheeler registrations. October 2026 contains Navratri and Dussehra, but Diwali falls on 8 November 2026, according to the 2026 list of closed holidays published by the Rajiv Gandhi Centre for Biotechnology, a central government institute, and FADA places both Dhanteras and Diwali in early November. To match October 2025, two-wheeler retail in October 2026 needed to rise about 76 percent from September’s level without either of the year’s two biggest purchase dates falling within the month.

Whatever the federation’s October release, scheduled for the first days of November, shows, a year-on-year decline in two-wheeler retail for the month would say little about demand. The federation’s own method anticipates the problem. Its festive tally covers 42 days, from the first day of Navratri to 15 days after Dhanteras, to allow for the lag between purchase and registration. In 2025 that window ran from 22 September to 2 November and produced 4,052,503 two-wheelers, up 21.80 percent on the 2024 festive period. Applied to 2026, the same rule would open the window on 11 October and close it in the second half of November. That 42-day total, rather than any monthly figure, is the fair test of whether the 2025 tax cut lifted the level of demand or merely moved it forward.

Dealers are carrying stock into November

Manufacturers have been shipping well ahead of retail. The Society of Indian Automobile Manufacturers reported domestic two-wheeler sales, which measure dispatches from factories to dealers, of 2,463,103 units in September 2026. FADA’s registration count for the same month was 1,790,188. The difference is roughly 673,000 units in one month. For April to September 2026, dispatches of 12,086,812 compare with retail of 11,043,407, a gap of about 1.04 million. The two series are not perfectly comparable, since they come from different reporting systems and are compiled on different dates, but the direction is clear: factories have been filling dealers’ yards ahead of the November festivals.

Stocking of this kind is normal before Dhanteras, and FADA’s August release already described festive stocking as under way; it is the mirror image of October 2025, when retail ran far ahead of wholesale as dealers sold down what they held. The risk lies in the composition of the stock as much as its size. FADA’s monthly releases give an inventory estimate only for passenger vehicles, so there is no published figure for two-wheeler days of stock. Its September commentary on two-wheelers also mentioned supply shortfalls in fast-moving models, which suggests that some dealers may be holding the wrong mix even as the aggregate gap widens. If conversion in November disappoints, the result is likely to show up first in December discounting and in a slowdown of factory dispatches in the following quarter.

Scooters are growing faster than motorcycles

The quarterly figures from the manufacturers’ society show a shift within the segment that the festive headlines conceal. Two-wheeler sales in July to September 2026 were 6.43 million units, up 15.2 percent, and SIAM noted that growth was led by scooters, which rose 27.7 percent, while motorcycles grew 7.4 percent. Exports reached 1.65 million units, a record for the second quarter. The society attributed the domestic growth to a low base, improved affordability after the tax change and an emerging replacement cycle. Because the tax cut applied to petrol two-wheelers up to 350cc in general, scooters as well as motorcycles, the divergence reflects buyers’ choices rather than a difference in tax treatment.

Company dispatch figures for September 2026, reported by Autocar India, point the same way. The largest manufacturer by dispatches reported a 60 percent increase in scooter shipments. The Japanese-owned market leader in retail registrations increased domestic dispatches by 26 percent, while one of the four largest makers, best known for its motorcycles, reported domestic dispatches down 12 percent even as its exports rose 34 percent. The pattern raises questions that registration data cannot answer: whether scooters are winning urban commuters, women riders or first-time buyers, and whether some of the substitution is from a petrol motorcycle to an electric scooter. Those questions call for direct customer research rather than more counting.

The 350cc line has become a product-planning boundary

At the upper end of the market, the tax change created a cliff. The largest maker of mid-size motorcycles reported, according to Business Today, that its sales of models above 350cc fell to 10,358 units in November 2025 from 10,996 a year earlier, while its sales of models up to 350cc rose 27 percent to 90,312. Its own filing to the stock exchanges for August 2026 shows the gap persisting: models above 350cc fell 13 percent to 13,336 units, while models up to 350cc and electric vehicles rose 15 percent to 113,143. For April to August 2026, the larger models were down 5 percent and the smaller ones up 28 percent. These figures include the company’s international business.

When FADA dealers cite a pull towards premium motorcycles, they are therefore describing a premium market that increasingly sits at or below 350cc. That has consequences for product plans, because the threshold applies to every model sold in India, whether it is built locally or imported. A manufacturer deciding whether to engineer a 400cc platform down to 350cc, or to keep a larger engine and accept a 40 percent tax, faces a question of how Indian buyers trade engine size, performance claims and price. The kind of competitive research and product research that CSM International conducts in motorcycle markets would start with that trade-off: which attributes buyers will give up to stay under the threshold, and which they will pay to keep.

Electric two-wheelers lost ground first, then recovered it

The first effect of the reform on electric two-wheelers was negative. FADA’s data show the electric share of two-wheeler retail at 8.09 percent in September 2025, before falling to 4.56 percent in October and 4.59 percent in November, as petrol models absorbed the festive surge. Business Today reported in December 2025 that analysts attributed the stall to pricing: electric models stayed at 5 percent tax while most petrol two-wheelers dropped from 28 to 18 percent, making the internal combustion alternative cheaper at purchase. Electric two-wheeler registrations fell 2.5 percent year on year in November 2025, to about 116,000 units, according to the same report.

The recovery since then has been steady. The electric share reached 7.40 percent in December 2025 and 9.79 percent in March 2026, and stood at 6.54 percent for the 2025-2026 financial year as a whole. In August 2026 it crossed 10 percent in a non-festive month for the first time, at 10.68 percent, and in September it reached 11.58 percent. During Navratri 2026, dealers registered 75,758 electric two-wheelers, up 33.41 percent on 2025, which on FADA’s figures is about 9.1 percent of the period’s two-wheeler total against about 6.6 percent a year earlier. The festive dip in electric share is visible again, but from a much higher floor than in 2025.

The subsidy was halved and demand rose anyway

This recovery took place while direct state support per vehicle was smaller than before. The Ministry of Heavy Industries’ notification of 10 August 2026, published in the Gazette of India, amended the PM E-DRIVE scheme so that the incentive for registered electric two-wheelers, unchanged at 2,500 rupees per kilowatt-hour of battery capacity and capped at 5,000 rupees per vehicle, now covers the whole period from 1 April 2025 to 31 March 2028. In the 2024-2025 financial year the figures had been 5,000 rupees per kilowatt-hour and 10,000 rupees per vehicle. The incentive is also limited to 15 percent of the ex-factory price, applies only to models priced up to 150,000 rupees ex-factory, and is capped at 4,579,120 vehicles.

The same notification raised the electric two-wheeler allocation to 2,767 crore rupees and the scheme’s total outlay to 11,900 crore rupees. It sets 31 December 2027 as the last date for claims and states that the scheme is fund-limited, so a component can close early if its money runs out. Autocar Professional reported that support for electric two-wheelers had previously been extended only until 31 July 2026. Rising adoption under a halved incentive suggests that other factors are doing more of the work. Incumbent petrol manufacturers have scaled their electric ranges: one reported a 110 percent rise in electric two-wheeler dispatches in September 2026 to 65,799 units, while a pure-play electric start-up saw its share of two-wheeler retail fall from 1.03 percent in September 2025 to 0.75 percent.

Petrol above 100 rupees a litre

Fuel prices are the most obvious candidate. As the conflict around Iran disrupted traffic through the Strait of Hormuz, India’s state-owned fuel retailers raised prices four times in May 2026 after months of absorbing losses. Akashvani News reported increases of 3 rupees a litre on 15 May, 90 paise on 19 May and 87 paise for petrol on 23 May, when the Delhi price reached 99.51 rupees. Business Today reported a further increase of 2.61 rupees on 25 May, taking petrol in Delhi to 102.12 rupees a litre. Together, those four increases add up to about 7.38 rupees. The Hans India reported the Delhi petrol price still at 102.12 rupees a litre on 24 October 2026.

The timing urges caution about causation. The electric share had already reached 9.79 percent in March 2026, two months before the first increase, so higher fuel prices reinforced a trend rather than starting one. For a commuter covering the same distance each day, a sustained rise in the pump price shortens the period over which an electric scooter’s higher purchase price is recovered, and it also strengthens the case for a two-wheeler over a car. In April 2026, FADA’s members had already listed fuel price pressure among their main headwinds for the following three months, alongside supply disruption linked to West Asia. The Reserve Bank noted in October that the pass-through of high energy prices into the economy was still continuing.

A weak monsoon tests the rural buyer

The 2025 festive season was supported by a good harvest. FADA’s releases from that period cite an above-normal monsoon and a strong kharif crop. The 2026 season has the opposite backdrop. United News of India reported on 30 September 2026 that the south-west monsoon ended with a rainfall deficit of 12.6 percent, citing the India Meteorological Department. The farm-linked segment of the vehicle market reacted first. Tractor retail was effectively flat in August 2026, at 0.84 percent above a year earlier, and fell 25.03 percent from July; in September it fell a further 12.58 percent from August, which FADA attributed to a monsoon that failed in parts and a later festive calendar, although September volumes were still 13.75 percent above a year earlier.

Two-wheelers have so far resisted. In September 2026, rural two-wheeler retail rose 33.11 percent year on year and urban retail 33.06 percent, although the month-on-month increase was led by cities. FADA argued in August that rural demand had begun to decouple from the monsoon, because the non-farm rural economy kept growing while farm-linked purchases slowed. That is a hypothesis rather than a settled finding. The Reserve Bank’s Monetary Policy Committee wrote in its October resolution that a deficient monsoon and strong El Niño conditions pose risks to the agriculture sector’s outlook and to rural demand, and harvest income is usually a central source of cash in the weeks around Diwali.

Credit has become more expensive

The Committee also raised the cost of money. At its meeting from 5 to 7 October 2026, it voted unanimously to increase the policy repo rate by 25 basis points to 5.50 percent and, by a majority, changed its stance to calibrated tightening; two members would have kept it neutral. The Committee noted that consumer price inflation had risen to 4.8 percent in August 2026 from 4.5 percent in July, and it projected inflation of 6.0 percent for the October to December quarter and 5.2 percent for the financial year. It also projected real GDP growth of 7.1 percent for 2026-2027, after 7.8 percent in the April to June quarter. The economy is growing quickly, but the festive season of 2026 is being financed in a rising-rate environment.

Dealers’ own survey responses have cooled over the year. In the release covering October 2025, 73.78 percent of FADA members rated liquidity as good and 75.17 percent rated sentiment as good. In the release covering September 2026, those shares were 48.42 percent and 58.37 percent. Expectations remain positive, with 75.57 percent of dealers anticipating growth in October 2026 and 78.28 percent for the October to December quarter, and 49.5 percent having raised their outlook for the financial year after a record first half. SIAM, for its part, has warned that a higher inflationary trend could lead to higher interest rates and that reported growth rates may moderate against the higher base of the previous year.

Price increases are eroding the tax gain

FADA has identified the most immediate threat to the festive season as the gradual return of higher prices. Its September 2026 commentary stated that a substantial part of the tax benefit still sits with the consumer, but that successive price increases driven by input costs are narrowing that cushion, and that dealers rank this as their top risk for the quarter. The federation’s August release flagged price increases on 1 September, and its September release listed the October price increases among the watch points for the festive month. One year on, in the federation’s words, “affordability remains the single engine of this cycle”, and it is precisely affordability that the price increases are wearing down.

The scale of the margin explains the concern. A cut of about 7.8 percent in a tax-inclusive price can be consumed by a handful of modest increases over twelve months, especially when they coincide with dearer fuel and dearer loans. For entry-level buyers, the relevant comparison is not the price before the reform but the monthly instalment they can carry. This is where stated intention and actual behaviour often diverge: a buyer may tell a survey that the tax cut made a motorcycle affordable and still postpone the purchase when the instalment rises. Customer research of the kind CSM International carries out is designed to separate those two signals, by testing price thresholds against what buyers actually do rather than what they say.

What a durable shift would look like in the data

A durable increase in demand would show up in several places at once. The 42-day festive total for 2026 would be compared with the 4,052,503 two-wheelers of 2025, ideally on a per-day basis and with the late registrations included. Retail in December 2026 and in the January to March quarter would hold above the levels of a year earlier, when the market was still digesting the October surge. The gap between factory dispatches and registrations would close without a sharp cut in production. And the scooter, electric and sub-350cc premium segments, which have grown fastest, would continue to outpace entry motorcycles, signalling that buyers are upgrading rather than simply bringing forward a purchase they would have made anyway.

The evidence available at the end of October supports part of that picture. Two-wheeler retail regained its pre-pandemic peak in the 2025-2026 financial year, set records for the months of August and September in 2026, and grew 20.43 percent in the first half of the current financial year. Two-wheeler volumes per day during Navratri were above 2025 despite the absence of a tax change to trigger them. Against that, the rural economy is weaker, money is dearer, prices are creeping up and dealers hold more stock. The result so far looks like a market that has moved to a higher level and is now testing whether it can grow from there, rather than one still riding the momentum of the reform.

What the festive calendar hides from analysts

For anyone using these numbers, the 2026 season is a reminder of how much the Indian calendar shapes the data. Navratri, Dhanteras and Diwali move by several weeks from one year to the next, so monthly comparisons can swing by large amounts for reasons that have nothing to do with demand. Registration data lag purchases by days or weeks, which is why FADA extends its festive window beyond Diwali. Provisional figures are revised upwards as late registrations arrive. The current releases are compiled from 1,468 of 1,469 regional transport offices, and the September 2026 and Navratri 2026 data for three-wheelers, commercial vehicles and tractors exclude Telangana, while the two-wheeler count does not carry that exclusion.

Wholesale data introduce a different distortion, because they reflect manufacturers’ production and stocking decisions rather than end demand. Company dispatch figures mix domestic sales, exports and sometimes electric and petrol models in ways that change from one report to the next. The safest practice is to compare festival window with festival window, to use per-day rates when windows differ in length, and to read registration and dispatch data together. Content analysis of dealer commentary, of the kind FADA publishes each month, adds context, but the federation’s own language has shifted from celebration in October 2025 to calls for discipline in October 2026, which is itself a piece of evidence.

The questions November will answer

Dhanteras and Diwali fall in early November 2026, and FADA’s 42-day count will extend to the second half of the month. In 2025, the federation published its festive figures on 7 November, five days after its window closed; a comparable timetable would put the 2026 figures in late November or early December. Three outcomes are plausible. The festive total could exceed 2025, which would confirm that the reform lifted the trend. It could match 2025 on a per-day basis while falling short in absolute terms, which would point to a stable but higher plateau. Or it could fall clearly below, which would suggest that rural strain, prices and credit costs have begun to bite.

Until then, the most reliable reading is the one the dealers’ federation itself recommended when it published its September figures: the headline gains should be read with discipline. In September 2025, India’s two-wheeler market received a tax cut of ten percentage points on the day its festive season began, and it responded with the strongest month in its history. In 2026, it is entering Diwali with dearer fuel, a weaker harvest, a higher policy rate, rising sticker prices and fuller showrooms, and with Navratri sales per day still above those of 2025. The figures for the weeks around 8 November will show whether the 2025 surge raised demand permanently or only moved it forward.