Bajaj Auto lowers 2W industry growth forecast for FY25 to 5%

Bajaj Auto has revised its estimate for growth in sales volumes of the two-wheeler industry during FY25 to around 5% from its earlier guidance of 5-8%.

“We had said that the industry is in the 5-8% zone (growth). I would still say maybe not 8%, but probably closer to 5%,” Bajaj Auto’s Executive Director Rakesh Sharma told reporters today.

The lower guidance reflects the lower-than-anticipated growth in volume during the ongoing festival season and weakness in demand for entry-level motorcycles, he said. He observed that the motorcycle off-take during the ongoing festival season has been kind of muted.

“We thought Dussehra would be at 6-8%, but it is not that much. It is 1-2%, almost similar to last year's…I don't think it (growth) will be in the high digits of 8% or so. We will be lucky if we see 3-5% growth for the industry in this festive season,” he said.

For most states in India, the festival season generally starts by the end of August or the beginning of September with Ganesh Chaturthi and Onam, and lasts till Bhai Dooj after Diwali in November.

This period is of much significance to automakers owing to high consumer spending due to cultural significance. Volumes generated in this period account for a significant part of automakers’ annual sales.

Sharma said the demand for entry-level motorcycles, which accounts for a significant volume of the two-wheeler industry, continues to remain weak despite discounts and offers.

"The entry-level market is in decline, and the 125cc+ is showing 5-6% growth. So overall is coming to 1-2% growth right now. That trend is very clear now,” he said.

Though the two-wheeler sales remain below the all-time high of 2018-19, there have been some green shoots, particularly in the rural areas since last year. Better disposable income, infrastructure, recovery from pandemic worries, favorable weather conditions, and better access to e-commerce have boosted consumer sentiments.

In financial year 2023-24, two-wheeler makers sold 18 million vehicles, an increase by around 13% from financial year 2022-23.