Bajaj Auto expects India’s two-wheeler industry to swing to around 6% growth post-festive season, reversing a decline seen between April and August this fiscal, Executive Director Rakesh Sharma said on Friday.
“The impact of the GST cuts cannot be emphasised enough. It was the perfect catalyst for an industry that was languishing at -1% from April to August. It got a steroid injection at the right time and surged forward,” Sharma said during the company’s Q2 FY26 earnings call.
The government’s GST reform–which slashed rates on up to 350 cc two-wheelers and small cars effective September 22–has provided a much-needed boost to retail demand during Navratri and Diwali. According to Sharma, Bajaj Auto fully capitalised on the shift, stabilising its overall market share and expanding its presence in the 150 cc-plus category.
“In our core 150 cc-plus segment, we’ve gained share, while in the 125 cc-plus category we’ve maintained it,” he said. The company had lost around 1-2 percentage points of share over the past few quarters, but this erosion has now “been stamped out,” he added.
In October, Bajaj Auto’s domestic two-wheeler retail sales rose to 3.23 lakh units, up from 2.31 lakh units a year earlier, reflecting a strong festive push. However, in September, the Pune-based automaker saw a slight dip, with sales slipping to 1.37 lakh units from 1.42 lakh units in the same month last year. On the wholesale side, the company dispatched 10.69 lakh two-wheelers in the September quarter, marking a modest 3% year-on-year growth.
However, the festive surge largely represents sales advancement rather than structural expansion, he cautioned. “The demand pyramid hasn’t widened, but the uptrading forces have become stronger. Across every segment, it’s the top-end variants that have outperformed the rest,” Sharma said.
Post-GST, customers already in the buying cycle appear to be opting for higher-end versions rather than entry-level models. “If you take 100 cc, it’s the better 100 cc; if you take 125 cc, it’s the better 125 cc,” Sharma said. “Buyers said, ‘Prices have come down, let me go for the top version.’ That phenomenon has happened all through.”
On demand trends, Sharma said growth was broad-based across rural and urban markets, with no single geography clearly outperforming the other. “During festivals, rural markets always get a few percentage points better, but this time the recovery has been fairly balanced,” he said. While some rural pockets were affected by unseasonal rains, urban sentiment had earlier been hit by cost-of-living pressures.
With overall demand revival, premiumisation, and government reforms aligning, Bajaj Auto sees the rest of FY26 as a period of steady recovery. “Both the quantum and the quality of growth have improved,” Sharma said. “If this sustains and there are no external spoilers, the coming months look much better for the industry.”
Strategic Focus on 125 cc+ Segment
Sharma reaffirmed Bajaj Auto’s strategy of prioritising the 125 cc-plus segment, driven by product innovation and customer upgradation. “Our strategy has been reinforced by the outcome of GST reforms,” he said.
When asked if the company might re-enter the 100 cc space more aggressively, Sharma said Bajaj was “not dogmatic” but remained cautious. “We are already there in 100 cc, but it’s a red ocean–highly competitive and less lucrative. The 125 cc-plus segment offers more headroom, challenge, and opportunity,” he said. “But if the market dynamics change and we find it attractive, we’ll look at it.”