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Premiumisation - two-wheelers (126-250cc)
What it is
The shift in India's two-wheeler mix from entry-level sub-125cc commuters to higher-displacement, feature-rich models, with the 126-250cc band the upgrade corridor to the aspirational >300cc segment
It shows in both formats - 125cc scooters hold 45-50% share in metros and Tier-1 cities, and the 350cc segment hit an all-time high 5.7% of all two-wheelers in YTD FY26 against 2% in FY15
Impact on industries
- The main realisation lever available - higher displacement lifts ASP without needing volume growth, in an industry that only just regained its FY19 peak
- Pulls through higher-value components: bigger engines, discs, alloys, larger tyres and electronics raise supplier content well ahead of unit growth
- GST 2.0 cuts against the top of the trend - above 350cc moved to 40% while sub-350cc fell to 18%, so the tax system now subsidises the commuter and penalises the upgrade
- Rewards brand and distribution depth, so gains concentrate in incumbents with established premium franchises while others chase the segment with limited success