Two-wheeler makers see H2 growth moderating on high base, uneven demand

Strong festive sales lift sentiment, but a high base, uneven rural recovery and widening gap between premium and entry-level models may weigh on two-wheeler growth in H2 FY27

India's leading two-wheeler (2W) manufacturers are bracing for slower growth in the second half of financial year 2026-27 (H2FY27), as a high base following last year's goods and services tax (GST) rate cut, uneven rural demand, and a widening gap between premium and entry-level segments weigh on the outlook.

 

TVS Motor, Bajaj Auto, and Hero MotoCorp, which reported strong quarterly performances, have maintained a positive outlook but indicated that growth could moderate during H2FY27 after a robust first half (H1).

 

The GST rate cut last year had released pent-up demand and boosted industry volumes, making year-on-year (Y-o-Y) comparisons tougher in the coming quarters.

 

TVS Motor Chief Executive Officer (CEO) K N Radhakrishnan said on the company’s second quarter (Q2) earnings call that he expects good single-digit growth in Q3FY27, with electric vehicles (EVs) contributing significantly to the momentum. Hero MotoCorp is projecting mid-to-high single-digit growth in H2FY27, although growth in petrol-powered models is expected to remain in the low single digits.

 

Bajaj Auto, meanwhile, expects double-digit growth in Q3FY27, albeit below the 18 per cent industry growth recorded in H1FY27.

 

Early festive-season trends have been encouraging. Bajaj Auto said registrations increased 10 per cent in the first 16 days of the festive period, with motorcycles above 150cc and electric scooters growing around 24 per cent. Hero MotoCorp reported a 24 per cent increase in its sales over a 100-day festive window that began with Ganesh Chaturthi. The company said the extended period offered a more representative comparison, given the shift in festive timing following last year's GST changes.

 

TVS Motor said it would have greater clarity on demand trends after Dhanteras.

 

However, the rural demand outlook remains uneven. Hero MotoCorp said rural demand was on a par with, or stronger than, urban demand, with overall sowing levels close to last year's. Bajaj Auto flagged drought-like conditions in Maharashtra, parts of southern India, and the Northeast, cautioning that the impact could become more visible in Q4FY27.

 

In the company's Q2FY27 earnings call, Bajaj Auto Joint Managing Director Rakesh Sharma also warned that the K-shaped recovery in the two-wheeler market could become more pronounced, with premium products continuing to outperform entry-level models.

 

The industry's growth mix is increasingly shifting towards scooters, electric vehicles (EVs), and premium motorcycles.

 

Scooters, including electric models, now account for around 41 per cent of the two-wheeler market. TVS Motor expects its share to rise to 45 per cent next year and 50 per cent over the next couple of years.

 

Despite the moderation expected in overall industry growth, TVS Motor and Bajaj Auto are confident of outperforming the market. TVS cited lean dealer inventories and demand for its products, while Bajaj Auto pointed to its refreshed Pulsar portfolio and increased production capacity for the Chetak electric scooter.

 

During the company’s Q2FY27 earnings call, Hero MotoCorp CEO Harshavardhan Chitale said the firm is focused on growth and market-share expansion, particularly in scooters and EVs, where it has made gains.

 

However, the company's market-share trajectory in the festive period came under scrutiny during its post-results interaction. An analyst flagged a decline in Hero MotoCorp's market share based on VAHAN registration data. The company disputed the assessment, saying it expected its share to improve as sales gathered pace towards Dhanteras.

 

India's two-wheeler wholesale sales stood at 12.09 million units in H1FY27, up 17.6 per cent Y-o-Y, according to data from the Society of Indian Automobile Manufacturers (Siam). Motorcycle sales grew 10 per cent to 6.92 million units, although their share of the overall market declined to 57 per cent from 61 per cent. Hero MotoCorp and Honda recorded 12 per cent growth, while Bajaj Auto's motorcycle sales declined 7 per cent. Scooter sales rose 29 per cent to 4.87 million units, increasing their market share to 40 per cent from 37 per cent. Electric scooter sales more than doubled, with the segment growing 103 per cent to 9.78 lakh units. Within motorcycles, the 150-350cc segment grew 29 per cent to 16.5 lakh units, while the entry-level segment recorded growth of around 5 per cent.

 

On the retail front, two-wheeler registrations rose 20.4 per cent Y-o-Y to 110 lakh units, according to the September data from the Federation of Automobile Dealers Associations (Fada). Electric two-wheeler registrations increased 73 per cent to 11.1 lakh units, based on VAHAN data. However, retail registrations declined 28.35 per cent in October, according to Fada, although they recovered around 30 per cent compared with September.