Bajaj Auto, TVS Motor shares down 2% as mandatory ABS rule will likely hurt demand- Grow Mudra

Bajaj Auto, TVS Motor shares down 2% as mandatory ABS rule will likely hurt demand

23 Jun , 2025 By : Debdeep Gupta

Shares of Bajaj Auto and TVS Motor slipped by up to 2 percent in morning trade on Monday, June 23, after the transport ministry made anti-lock braking systems (ABS) mandatory for all new scooters and motorcycles.

International brokerage Nomura expects India’s two-wheeler demand to decline by 2–4 percent, as the government moves to mandate Anti-lock Braking Systems (ABS) across all domestic models, including entry-level variants. The regulation could push up prices by around Rs 3,000 per unit, translating to a 3–5 percent increase in overall vehicle costs — a burden that may weigh heavily on price-sensitive segments.

The timing of the regulation assumes significance. In FY25, two-wheelers in the sub-125cc category accounted for nearly 85 percent of total domestic sales — around 1.69 crore units — with 92.6 lakh ICE motorcycle sales and 71 lakh scooter sales. Scooters in this category made up nearly all of their domestic sales. Hero MotoCorp had the highest exposure, with 99 percent of its volumes coming from this segment, followed by TVS Motor (86 percent), and Bajaj Auto (72 percent) among listed companies.

Nomura noted that similar regulatory-led price hikes in the past — such as those following changes in insurance norms and BS-6 emission standards — have negatively impacted demand. “This time, the impact may be more pronounced in entry-level segments like 100cc bikes, scooters, and mopeds. Most EVs will also have to absorb this cost,” the brokerage added.

The latest development comes just as the two-wheeler industry was poised for a strong recovery in FY26. Demand had begun rebounding, especially in rural markets where the ongoing wedding season has boosted purchases, with two-wheelers often bought as gifts. Analysts believe rural demand will continue to outpace urban consumption through 2025, driven by government support, tax incentives in the Union Budget, and overall macroeconomic stability.

However, the industry also faces headwinds on the supply side. China’s tightening grip on rare-earth magnet exports — a key component in electric two-wheelers — has raised fresh concerns. If the restrictions persist, companies like Bajaj Auto, TVS Motor, and Hero MotoCorp may encounter production bottlenecks in the coming months.

At about 10 am, shares of Bajaj Auto and TVS Motor were down 1.2 and 1.5 percent.