The domestic motorcycle market in the country has witnessed a resurgence in demand, driving positive growth. However, it is also experiencing structural shifts, notably with the entry-level segment losing ground to the trend of premiumisation.

The entry-level segment reported fragile recovery in the post-Covid period, mainly due to a significant price increase (25 per cent or more) in new two-wheelers resulting from regulatory changes. Additionally, muted sentiments among rural buyers, a key driver of 110cc motorcycles, led to poor volumes.

With improved rural demand, the entry bike segment has been reporting positive growth in the past couple of years. However, the segment faces ongoing challenges as consumers, especially young buyers, increasingly prefer higher CC motorcycles. As a result, higher CC bikes record strong growth and their share in the overall pie is on the rise.

In FY24, the motorcycle market grew by 14 per cent at 11.65 million units, while the entry-level bike segment grew by 8 per cent at 5.65 million units. The share of entry-level bikes (up to 110cc) in the overall two-wheeler market (including bikes, scooters and mopeds) dropped to 26.4 per cent from 30.4 per cent in FY20 and 26.8 per cent in FY23. Meanwhile, the share of 110cc-125cc bike segment has gone up from 11.3 per cent in FY20 and 13.8 per cent in FY23 to 14.9 per cent in FY24,

Overall, the share of 150cc bikes in the domestic two-wheeler market has touched double digits to 10.6 per cent in FY24 — up from 7.4 per cent in FY20 and 9.8 per cent in FY23. Domestic two-wheeler majors such as Hero, TVS Motor and Bajaj are launching more number of higher CC bikes to capitalise on the premiumisation trend, shifting their product mix accordingly.

For instance, TVS Motor Company’s product mix has changed towards premium motorcycles over the past several years. “The share of entry-level bikes in its volumes has come down to 8.5 per cent in FY24, from 11.5 per cent in FY20. While the share of 125cc bikes has gone up from 1.1 per cent in FY20 to 11.8 per cent in FY24,” says a report of Emkay Global Financial Services

In its recent earnings call, Bajaj Auto’s Executive Director Rakesh Sharma indicated that domestic motorcycle demand was buoyant, but a significant surge was witnessed for premium motorcycles with higher growth than entry-level bikes. “In motorcycles, we emerge on a full-year basis as the largest 125cc player,” he said.

Industry analysts point out that the entry-level bike segment would continue to face pressures due to the premiumisation trend and the disruption of electric vehicles.

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