Rural markets continue to outperform urban areas, driven by improved agricultural sentiments and seasonal marriage demand.
28 Feb 2025 | 2168 Views | By Shruti Shiraguppi
Two-wheeler dispatches are expected to grow approximately 5% year-over-year in February 2025, outpacing the projected 1-3% growth in retail sales, according to a recent sector update from Motilal Oswal Financial Services.
In their February 27 report, analysts Aniket Mhatre and Amber Shukla highlight that rural markets continue to outperform ...
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Two-wheeler dispatches are expected to grow approximately 5% year-over-year in February 2025, outpacing the projected 1-3% growth in retail sales, according to a recent sector update from Motilal Oswal Financial Services.
In their February 27 report, analysts Aniket Mhatre and Amber Shukla highlight that rural markets continue to outperform urban areas, driven by improved agricultural sentiments and seasonal marriage demand. This has resulted in stronger sales particularly in states like Madhya Pradesh and Uttar Pradesh.
"Rural markets continue to outperform urban areas, driven by improved agricultural sentiments and seasonal marriage demand, leading to stronger sales in states like MP and UP," the report states.
A notable trend emerging in the two-wheeler segment is the stronger demand for scooters compared to motorcycles. The report specifically mentions that TVS Motor Company's new Jupiter model "is doing very well and continues to gain share across key markets." Similarly, TVS Ronin has shown improved performance over the last few months.
For Bajaj Auto, the report indicates that while Chetak electric scooter sales have picked up, motorcycle sales remain weak. Interestingly, the analysis points out that "Chetak is doing better than TVS iQube in select markets given its metal body," suggesting consumer preference for traditional scooter construction in the electric segment.
On the other hand, Hero MotoCorp has responded to weak demand by cutting prices of its HF Deluxe by approximately INR4,000 in select markets. However, the company's Xtreme125R continues to see good demand, indicating segmented market performance.
The report also notes that only Honda Motorcycle & Scooter India (HMSI) has launched OBD2-based models so far, with other manufacturers expected to introduce similar models in March 2025.
For Royal Enfield, increased model availability and marketing efforts are helping improve retail sales, with the brand expected to post a strong 14% year-over-year growth in dispatches for February.
In terms of wholesale dispatches, Motilal Oswal forecasts varying performance across manufacturers for February 2025: Hero MotoCorp is expected to see a 2% decline, while Bajaj Auto, TVS Motor, and Royal Enfield are projected to grow by 8%, 9%, and 14% respectively.
Inventory levels across most two-wheeler manufacturers remain normal at approximately 35-40 days, indicating relatively balanced supply and demand dynamics despite the mixed market performance.
The analysts note that while overall growth remains modest at 1-3% for retail sales, the 5% projected growth in dispatches suggests manufacturers are optimistic about future demand, particularly with the approaching spring season.
January Retail Sales
The Indian two-wheeler market kicked off 2025 on a high note, with retail sales reaching 1,525,862 units in January, according to data released by the Federation of Automobile Dealers Associations (FADA) earlier in the month.
This marked a year-on-year (YoY) growth of 4.15% compared to 1,465,039 units sold in January 2024, alongside a significant 27.39% month-on-month (MoM) increase from December 2024’s 1,197,742 units.
Industry analysts attributed this surge to pent-up demand, favorable market conditions, and a strong push in both urban and rural segments.
Hero MotoCorp retained its top position, selling 410,774 units, though it saw a marginal YoY decline of 0.13% from 411,318 units in January 2024. Honda Motorcycle and Scooter India followed closely with 372,982 units, posting a 4.10% YoY increase from 358,278 units.
TVS Motor Company emerged as a standout performer, with sales rising 12.64% YoY to 287,437 units from 255,175 units, bolstered by strong demand for its scooters and motorcycles.
Bajaj Auto recorded a slight dip, selling 173,754 units compared to 177,377 units in January 2024 (down 2.04%), while Suzuki India saw a robust 16.38% YoY growth, retailing 88,315 units. Royal Enfield continued its premium segment dominance, with a 13.74% YoY increase to 76,574 units.
The electric two-wheeler (EV) market displayed varied trends. Ola Electric, a key player, sold 24,336 units, down 24.92% YoY, despite introducing new models, suggesting challenges in maintaining momentum. In contrast, Ather Energy reported a 37.59% YoY rise, selling 12,906 units, driven by its expanding range and urban appeal. Greaves Electric surged 53.12% YoY to 3,611 units, while PUR Energy posted an impressive 166.13% YoY growth, reaching 1,650 units, reflecting a growing appetite for affordable EVs.