Local ABS suppliers lack sufficient capacity: HMSI's Yogesh Mathur

Two-wheeler demand likely to remain tepid until festival season, says HMSI

The government’s decision to mandate anti-lock braking systems (ABS) for all two-wheelers from January 1 next year has raised concern across the industry due to a limited local-supplier capacity, says Yogesh Mathur, director (sales & marketing), Honda Motorcycle & Scooter India (HMSI), in a video interview with Deepak Patel. He says demand for two-wheelers is expected to remain weak until the festival season begins, and the industry is watching negotiations between India and China on rare-earth minerals, essential for electric vehicles. Edited excerpts:

 

The two-wheeler industry’s performance was tepid (a 6.2 per cent year-on-year drop) in the first quarter of 2025-26. Can you explain what is going on in the market?

 

Despite gross domestic product (GDP) growth being in the 6-6.5 per cent range, the monsoon being good, interest rates low, inflation rates being much lower, it looks like real cash in the hands of the people is not there. Real GDP (growth) does not look like 6.5 per cent, which we are currently seeing. Recently, there has been an announcement on the cash reserve ratio (CRR). (On June 6, the Reserve Bank of India cut the CRR by 100 basis points in a phased manner to inject ₹2.5 trillion into the banking system.) So, hopefully, by this festival season, it looks like this entire fund will be available with banks to pump into the market.  Till then, it looks like the growth trend (of the two-wheeler) industry will remain the same as before. 

 

The customers are not spending?

 

No. Overall sentiment is not really positive globally and in India. People are still resisting spending the way they used to earlier. They are waiting for an appropriate time to buy, when sentiment is positive globally and in India.

 

What will be your growth forecast for the two-wheeler industry for FY26?

 

The industry’s final numbers for FY26 will be better than those of last year. Once the cash flow starts happening from September onwards, it will then, maybe, drive market sentiment. It will be realistic to give a forecast at that time.

 

In the Union Budget 2025, the government announced a major relief by exempting individuals earning up to ₹12 lakh annually from income tax. Do you expect to see its impact on your sales from September onwards?

 

As of now, we have not seen an impact because tax saving will happen for the entire year’s base. Currently, people who earn below ₹12 lakh are still holding on and increasing their savings. They may start spending closer to the festival season.

 

Is HMSI expecting to record lower single-digit growth in FY26?

 

We are aiming higher than that. It depends on how the festival season goes this time. This year’s monsoon has been okay till now. Crop sowing has been good. The challenge is that the festival season is coming a bit earlier than usual. Last year, it was in November. This year, it is in September-October, and the money from crop sales does not come by this time. Therefore, the entry-level motorcycle segment could remain stagnant during the festival season, and see growth from November onwards.

 

The government has mandated ABS for all new two-wheelers from January 1, 2026, extending the requirement beyond the current 125 cc-and-above category to include entry-level models as well. What kind of price increase do you expect to see in your sub-125 cc models?

 

This is something that is impacting the entire industry. Everyone is thinking of how to deal with this situation, not just from the OEM (original equipment manufacturer) perspective but also from the supplier perspective in terms of readiness, capability, and the technology’s availability. Those things are important to take care of because the focus currently is on “Make in India”. Suppliers’ capabilities, and the capacities which they have, do not justify because the majority of the market is in the sub-125 cc segment. So, from that perspective, are we really ready to expand our ABS regulation to the sub-125 cc segment? That is the concern right now. I am sure everyone else has a similar concern.

 

So, the Society of Indian Automobile Manufacturers’ concern is whether local suppliers have the capacity to meet the ABS demand for all two-wheeler makers when this rule is implemented. Is that correct?

 

Yes.  The industry is facing another issue related to importing rare-earth magnets. How are you managing the situation? 

This issue is also not just with HMSI but also the two-wheeler as well as the four-wheeler industry. The focus is to go carbon-neutral, and that is why a lot of work is on developing electric vehicles (EVs). So, the government has to take a bigger role in terms of how it can have a better negotiation with China in supplying rare-earth elements. And, that negotiation will only drive the future of the EV market, especially in India. The ball is in the court of the government of India on how to deal with this kind of a situation. 

 

How much stock do you have before your production starts getting impacted?

 

Currently we are not impacted. We have not reduced production. We are monitoring the situation, and based on that, we will take a call. We are secured as of now and don’t  foresee any immediate impact on production.