With lucrative price offerings, upgraded features and replacement, the 125cc segment of motorcycles is witnessing an uptick in the urban and rural segments of the Indian automobile market.

“The 125cc segment has seen a rise from 2.6 million units to 3.2 million units from FY19 to FY24 on account of better pricing strategy and launches. This segment has also started seeing replacement demand kicking in. Going forward too, expect it to grow faster than entry and 110cc segments,” said Hemal Thakkar, Senior Practice Leader & Director of Transport Logistics and Mobility sector, CRISIL Market Intelligence and Analytics.

According to SIAM statistics, the motorcycle segment higher than 110cc and equal to 125cc saw a 9.8 per cent increase in domestic sales year on year between April and December 2023. About 23,94,402 units of two-wheelers were sold between April and December in 2023-24, while 21,79,058 two-wheelers were sold between April and December in 2022-23. The 125cc segment is driving growth for two-wheeler makers, with companies offering the latest technologies and focussing on new launches.

“We were very early to spot the rise of the segment because when the BS-VI related costs went up, we knew that the 150cc costs were going up much more because of the ABS, etc. Therefore, the combined effect of ABS and BS-VI would increase the prices of 150cc and create an opening for 125cc. This segment has customers who want to be pure commuters, slightly older in age profile to very sporty and youthful. We’ve got a Pulsar for each type of customer over there. The strategy has worked out for us. We have got seven-nine models from 125cc to 200cc compared to others’ three or four,” said Rakesh Sharma, Executive Director of Bajaj Auto, during the analyst call.

“We launched Xtreme 125 to strengthen our 125cc portfolio. India is the story of many Indias and gradually you see upper premium, middle premium, and even in 125cc, if you segment it into two - which is the upper premium 125cc and let’s say a non-premium 125cc, then that’s also growing. So, you’ve seen every segment, you kind of see premiumisation and that’s growing. It’s not just about the top end of India that’s growing, you can see aspirations of people growing,” said Niranjan Gupta, Chief Executive Officer, Hero MotoCorp, during the earnings call .

Segment migration

Experts believe that with competitive prices, consumers will migrate from the 100cc segment to 125cc.

“While we have a good play in the 100cc segment through our Platina, given that the economic drop is improving, and even this segment has emerged from the shadows of Covid. We feel that it is a better strategy to invade the segment from the outsider’s segment to pull people into 125cc. And some of it is happening with the Pulsar. We are looking at programmes where we will be able to offer a very appealing product to people who are in 100cc and migrate them upwards,” added Sharma.

“The entry segment has dropped from almost 3.7 million units in FY19 to about 1.7-1.8 million units FY24E, while the 110cc segment has dropped from about 4 million to 3.8 million during the same period The entry and 110cc segment will see slow and gradual recovery, but for the entry segment to reach 3.7 million units will be a tall order,” said Thakkar.

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