Bajaj Auto’s Caution On Festive Season Sales Doesn’t Add Up With Ground Reality

Bajaj Auto Ltd. has trimmed its growth outlook for India’s two-wheeler industry in the middle of a lucrative festive season—much to the surprise of analysts and dealers alike.

According to the Pulsar maker, growth in the world’s largest two-wheeler industry is likely to moderate to 5% in fiscal 2025 from 5–8% predicted earlier. That stems from a weaker-than-expected festive season demand.

“We had said that the industry is in the 5–8% zone. I would still say maybe not 8%, but probably closer to 5%,” Rakesh Sharma, executive director at Bajaj Auto, said during a post-earnings call on Wednesday. “The entry-level market is in decline, and the 125cc+ is showing 5–6% growth. So, overall, it is coming to 1–2% growth right now. That trend is very clear now.”

“We thought Dussehra would be at 6–8%, but it is not that much. It is 1–2%, almost similar to last year's... I don't think it (growth) will be in the high digits of 8% or so. We will be lucky if we see 3–5% growth for the industry in this festive season.”

That outlook is stark, for it comes amid a revival of sorts for India’s two-wheeler industry since the pandemic blew out sales in the hinterland.

In July–September 2024, Indian two-wheeler makers dispatched 51,79,349 motorcycles and scooters as against 45,98,442 units a year earlier—a 12.6% growth year-on-year, according to data sourced from the Society of Indian Automobile Manufacturers.

In the first half of fiscal 2025, two-wheeler sales grew 16.3% YoY to 1,01,64,980 units as against 87,39,406 units a year ago. This is the first time since 2019 that half-yearly sales have crossed the one-crore mark.

Bajaj Auto itself has been a beneficiary of the revival.

In July-September 2024, the company’s two-wheeler sales—including exports—increased 17.19% YoY to 10,33,208 units as against 8,81,583 units in the year-ago period, according to data on the company's website. Such has been the demand for motorcycles and scooters that even its electric scooter—an also-ran in the EV space for nearly five years—clocked 1 lakh units in the three months ending Sept. 30. 

The outperformance was reflected in Bajaj Auto’s record-setting second quarter, where nearly all financial metrics were at their historical highs.

Against that backdrop, predictions of a lacklustre fiscal don’t really add up.

“That’s something beyond comprehension,” an analyst with a Mumbai-based brokerage told NDTV Profit on the condition of anonymity. “Bajaj Auto is not correct in its assessment. We are seeing 12–13% growth in the first half of October, and Diwali is yet to come.”

“I’m confused,” a large dealer from Northern India said. “From Navratri to Navratri, I have clocked 20% growth year on year. The full-year growth may very well settle at 12%. I see no pain. A degrowth is impossible.”

Bajaj Auto’s own dealer in Mumbai's Chembur area indicated that for him, volumes have grown by nearly 20% YoY in the ongoing festive season. Daily enquiries have doubled, as have deliveries, with the Bajaj Freedom 125—the world’s first CNG motorcycle—clocking 100–150 unit sales from two of his dealerships.

Even Triumph Motorcycles UK, whose India operations are handled by Bajaj Auto, is on an upswing. According to a Mumbai-based dealer, sales of Triumph’s 400-cc motorcycles are likely to double to 500 units in October.

“We are a tad surprised by the outlook on festive demand, wherein management noted that industry volumes are up only 1–2% vs. last year,” Citi Research said in an Oct. 16 note. “VAHAN data suggests registrations are up almost 12% YoY.”

But we should not draw the full season’s conclusions as yet, Bajaj Auto’s Chief Financial Officer Dinesh Thapar said during the post-earnings call on Wednesday.

“I've seen in the past that, you know… the last two weeks... the final overs... can swing the festive (demand) substantially. So we are waiting for the entire festive (season) to get over and for it to settle and then see how things have happened,” he said.

“I don't think, you know, we'll reach 8–9% growth. I would be surprised (if that happens), but I hope that we should be there at 3–5% growth as an industry.”

On Thursday, reacting to the muted industry outlook, Bajaj Auto shares fell as much as 13.3% intraday before paring some of the losses to end 12.87% lower at Rs 10,122.30 apiece. Its peers Hero MotoCorp Ltd. and TVS Motor Co. Ltd. fell 3.32% and 3.17%, respectively. Those companies are yet to declare their second-quarter earnings. Their outlook on industry growth is still awaited.