Premiumisation rides high in 2Ws, GST relief may nudge entry bikes

CHENNAI: Even as the government’s GST cut raises hopes for a revival in entry-level bike sales, the long-term direction of India’s two-wheeler market remains clear — a steady march toward premiumisation, with buyers shifting gears toward more powerful, stylish, and tech-savvy models.Industry analysts point out that premiumisation is no longer just a trend — it’s a structural shift in India’s motorcycle and scooter market. Motorcycles with engine capacities exceeding 150cc accounted for about 22% of total sales volume in the first half of the current fiscal year, up from 18% a year ago — an 18.5% year-on-year increase. In scooters, the shift is evident through enhanced features, contemporary styling, and connected technology.Consumers are moving from basic mobility to performance, comfort, and aesthetic appeal, while manufacturers are expanding their portfolios with more high-performance variants. “Increasing consumer aspirations and expanding product options are together accelerating this move toward premium offerings across both segments,” said Poonam Upadhyay, Director, Crisil Ratings.For instance, leading two-wheeler maker TVS Motor Company has launched most of its new models in the higher-end segments in recent months, leveraging the premiumisation trend and reaping dividends through strong double-digit sales growth. Other players such as Yamaha, Bajaj, and Hero have also been strengthening their focus on the premium motorcycle category.The recent GST rate cut is expected to benefit both entry-level and some high-end segments. The reduction in GST on two-wheelers with engine capacities up to 350cc — from 28% to 18%, a 10-percentage-point decrease — covers nearly the entire motorcycle market. The 150–350cc segment, which accounts for about 93% of premium motorcycle sales, will gain the most, while entry (up to 110cc) and executive (110–150cc) motorcycles, together comprising around 78% of total sales, will also benefit.A broad-based recovery in demand for entry-level motorcycles, however, may prove temporary despite the GST reduction. “Rural buyers are also shifting toward motorcycles with higher engine capacities or scooters with advanced features that provide improved performance and comfort. The rapid growth of electrification is also attracting short-distance commuters to electric vehicles, especially in urban and semi-urban regions,” said Upadhyay.In the motorcycle market, the entry-level segment (up to 110cc) — which accounted for 46% of overall bike sales, down from 49% in H1 FY24 and 57% in H1 FY22 — reported a 4% decline during the first half of this fiscal. In contrast, the above-150cc segment has grown in double digits.Although reduced prices and festive-season sentiment may lead to a short-term rise in sales, a sustained recovery in entry-level motorcycles appears unlikely. “Demand for two-wheelers has clearly shifted toward motorcycles with higher engine capacities and scooters with advanced features, where consumer aspirations and perceived value converge,” she added.