"I don’t expect it to disappear but gradually the 125cc plus segment could become larger," says Sharma.
25 Jan 2024 | 4039 Views | By Kiran Murali
The growth of entry-level motorcycles is likely to slow down in the future as Indian consumers are aspiring for features and performance. Bajaj Auto’s Executive Director Rakesh Sharma believes the share of motorcycles with engine capacity of 125cc and more in the domestic market is likely to outpace the share ...
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The growth of entry-level motorcycles is likely to slow down in the future as Indian consumers are aspiring for features and performance. Bajaj Auto’s Executive Director Rakesh Sharma believes the share of motorcycles with engine capacity of 125cc and more in the domestic market is likely to outpace the share of entry-level motorcycles in the next three years. A similar trend was witnessed in the passenger vehicle segment where utility vehicles now account for half of the sales.
“There is a large 100-110cc segment. It may not be growing as fast. I don’t expect it to disappear but gradually the 125cc plus segment could become larger. Taking a three-year view, that segment could become larger than the 100-110cc segment,” Sharma told reporters today in a post-earnings call when asked about the future of the entry-level segment.
Currently, over half of the motorcycle sales in India come from the entry-level segment. As per the data from the Society of Indian Automobile Manufacturers, the share of motorcycles with engine capacity of up to 110cc declined to around 51 percent in 2022-2023 from 55 percent in 2021-2022.
Over the last couple of years, growth in the 125cc plus segment has outpaced the overall motorcycle sales as there has been a maturity in terms of demand for models with higher capacity amid the growing aspiration of India’s young consumers. New products, designs, and technologies have been attracting more and more buyers to this segment.
The entry-level segment was hit hard the most during the pandemic and its recovery has been sluggish following price hikes and higher borrowing costs. Recently, some green shoots were witnessed in the segment with higher disposable income and improved rural sentiments. Sharma believes the segment will benefit going forward, considering demographics, penetration level, and more purchasing power, but the growth could be the least.
“Its share in the industry will continuously erode. It eroded faster during the pandemic because then customers were more fragile and vulnerable. Now, some savings have come to that customer. So it is true. But the tendency is for people to upgrade to 125cc and then to 150cc. That trend we are seeing,” he noted.
Major two-wheeler makers have also shifted their focus to mid-size and premium segments in a bid to grab more volume and improve the company’s margins. Companies such as Hero MotoCorp, Bajaj Auto and TVS Motor have partnerships with premium automakers such as Harley-Davidson, Triumph and BMW to improve their product mix.