Bajaj Auto raises FY25 2W industry growth forecast to 6-8%

Bajaj Auto expects India’s two-wheeler industry sales to grow by 6-8% over the next 3-4 months, with the above 125cc segment sales expected to grow faster than 100cc two-wheelers, the company’s executive director Rakesh Sharma said on Tuesday.

In October, Bajaj Auto had revised its sales growth estimate for the two-wheeler industry for FY25 to around 5% from its earlier guidance of 5-8%. This was on account of lower-than-anticipated volume growth recorded during Dussehra and weakness in demand for entry-level motorcycles. However, Diwali brought a twist.

The domestic motorcycle industry’s performance in the December quarter was lifted by a strong demand during Diwali. “In the first half, the industry was growing at 6%, and then you had a very good festival season. Particularly Diwali festival, where the growth rates picked up into double digits, 11-13%. And after that they have come down slightly. As a result of which the 9-month growth rate is at about 8%,” Sharma said.

“If you take the two-wheeler customer profile, most of them fall in the income range of Rs 30,000 to Rs 70,000 per month. People earning Rs 30,000 have less disposable surplus, because of inflation and various other reasons. But the disposable surplus of a person earning Rs 70,000 is much superior... Because of the shrinkage of the disposable surplus, the decisions to buy a new motorcycle either get postponed or people buy a second hand motorcycle. That phenomenon is less severe as you keep going up the pyramid,” he said.

To make the most of the current demand trend, the Bajaj group company plans to introduce nine variants of its existing models in the 125cc plus segment.  

“The 125cc plus segment is growing at almost twice the rate of the 100cc segment. And we feel it has got an established trend and that should continue,” Sharma said during a media call held to discuss the company's third quarter results.

According to Sharma, the Bajaj group company remains focused on the 125cc plus segment, as it believes there is a big opportunity there, and the segment offers better margins.

According to Sharma, Bajaj Auto’s market share has remained steady in the 125cc plus segment–with the company holding on to its second position–even as there was substantial pricing and discount action during the festival season. However, the company has seen some erosion in its share in the below 125cc segment, as it stayed away from the tactical pricing initiatives.

Between April-December, Bajaj Auto sold a total of 502,220 motorcycles in the above 125cc segment in India, registering a flat growth on year, according to data from the Society of Indian Automobile Manufacturers. However, the company’s exports came in at 489,447 units, up 23% on year. By comparison, the two-wheeler industry’s domestic sales in the 125-500cc segment rose 8% on year to 22.07 lakh units, and exports increased by 28% to 10.30 lakh units.

In the 75-125cc segment, the industry sold a total of 71.97 lakh units in India in nine months of FY25, registering a growth of 8% on year. The segment exports came in at 15.63 lakh units, up 17% on year. By comparison Bajaj Auto’s domestic dispatches fell 2% on year to 10.99 lakh units, but exports rose by 5% on year to 742,144 units.

For the December quarter, Bajaj Auto reported a 6% year-over-year increase in revenue from operations to ₹12,807 crores. The company’s sales growth was driven by strong exports recovery and expansion in their electric vehicle segment. It was also underpinned by their highest-ever festive retail volumes in the domestic market. 

On the profitability front, the company recorded an EBITDA of ₹2,581 crores and PAT of ₹2,109 crores respectively. EBITDA margin remained steady at 20.2%, showing a 10 basis points improvement year-over-year.