Bajaj Auto Ltd cuts its growth forecast for India’s two-wheeler industry amid festive season

To the astonishment of experts and dealers alike, Bajaj Auto Ltd. has downgraded its growth projection for the two-wheeler market in India in the midst of a profitable Christmas season.
The manufacturer of Pulsar predicts that growth in the biggest two-wheeler sector in the world would probably slow to 5% in fiscal 2025 from the initial 5-8% growth forecast. This is due to lower-than-anticipated demand throughout the holiday season.

The industry is in the 5-8% range, as we have previously said. During a call after the company’s results on Wednesday, Rakesh Sharma, executive director of Bajaj Auto, said, “I would still say maybe not 8%, but probably closer to 5%.” “The 125cc+ market is growing by 5–6%, while the entry-level market is contracting. Thus, generally, it is now growing by 1% to 2%. Now, that tendency is really evident.

“Dussehra is not as much as we had anticipated, at 6-8%. 1–2% is about the same as it was the previous year. Growth won’t be in the upper digits of 8% or such, in my opinion. If the industry grows by 3-5 percent during this Christmas season, we will be fortunate.

The bleak prognosis stems from the fact that the two-wheeler business in India is seeing a resurgence of sorts after the epidemic devastated sales in the rural areas.

According to figures from the Society of Indian Automobile Manufacturers, Indian two-wheeler manufacturers shipped 51,79,349 bikes and scooters during July and September of 2024 compared to 45,98,442 units the previous year—a 12.6% year-over-year increase.

Two-wheeler sales increased 16.3% YoY in the first half of fiscal 2025 to 1,01,64,980 units from 87,39,406 units in the previous year. Since 2019, half-yearly sales have not exceeded one crore for the first time.

The recovery has benefited Bajaj Auto directly.

According to statistics on the company’s website, the company’s two-wheeler sales—including exports—rose 17.19% YoY to 10,33,208 units in July–September 2024, from 8,81,583 units in the same period the previous year. Because of the high demand for motorbikes and scooters, the company’s electric scooter, which has been an afterthought in the EV market for over five years, sold one lakh units in the three months that ended on September 30.

Bajaj Auto had a record-breaking second quarter, with almost all financial measures reaching all-time highs, which was indicative of the outperformance.

In light of this, forecasts of a drab fiscal year don’t really stack together.

On condition of anonymity, an analyst from a brokerage in Mumbai told NDTV Profit, “That’s something beyond comprehension.” “Bajaj Auto’s evaluation is inaccurate. In the first part of October, we have seen increase of 12–13%, and Diwali is yet to come.

A big merchant from Northern India said, “I’m confused.” “From one Navratri to the next, I have grown by 20% every year.” It’s possible that the annual increase may level off at 12%. There isn’t any discomfort visible. Degrowth is not feasible.

According to Bajaj Auto’s own dealer in the Chembur region of Mumbai, over the current holiday season, volumes have increased by about 20% year over year. The Bajaj Freedom 125, the world’s first CNG motorbike, is selling 100–150 units a day from two of his stores. Daily inquiries have quadrupled, as have deliveries.

Triumph Motorcycles UK, whose activities in India are managed by Bajaj Auto, is also seeing growth. Triumph’s 400-cc motorbike sales are predicted by a dealer in Mumbai to quadruple to 500 units in October.

In a report dated October 16, Citi Research said, “We are a little surprised by the outlook on festive demand, wherein management noted that industry volumes are up only 1-2% vs. last year.” “VAHAN data indicates a nearly 12% YoY increase in registrations.”

However, Dinesh Thapar, the Chief Financial Officer of Bajaj Auto, said on the company’s Wednesday post-earnings call that we shouldn’t yet make conclusions about the whole season.

“I’ve observed in the past that the final overs in the last two weeks can significantly affect the festive (demand).” Therefore, we are waiting for the full holiday season to pass and settle before examining what has transpired,” he said.

“I don’t think we’ll grow by eight to nine percent.” If that occurs, I would be shocked, but I hope that the industry will be growing at a rate of three to five percent.

In response to the subdued industry forecast on Thursday, Bajaj Auto shares saw an intraday decline of much to 13.3% before somewhat recovering to close 12.87% down at Rs 10,122.30 a share. Its rivals TVS Motor Co. Ltd. and Hero MotoCorp Ltd. had declines of 3.17% and 3.32%, respectively. These businesses have not yet released their profits for the second quarter. We’re currently waiting for their growth industry forecast.