A combination of policy tailwinds, new products and Honda’s cautious approach on EVs put a stop to the constant encroachment of Hero MotoCorp’s market share by its former partner in 2026.
27 Jan 2026 | 144 Views | By Kiran Murali
For a brief moment in 2024, India's two-wheeler pecking order looked vulnerable.
Hero MotoCorp, the industry's perennial volume leader, watched its lead over former partner Honda shrink at an alarming pace. The Japanese major was firing on multiple cylinders—scooters, executive motorcycles, premium bikes—and the gap that once seemed insurmountable had ...
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For a brief moment in 2024, India's two-wheeler pecking order looked vulnerable.
Hero MotoCorp, the industry's perennial volume leader, watched its lead over former partner Honda shrink at an alarming pace. The Japanese major was firing on multiple cylinders—scooters, executive motorcycles, premium bikes—and the gap that once seemed insurmountable had more than halved, from 13.8 lakh units in 2023 to 6.88 lakh by year-end.
Honda's global management told investors in Japan that the number one position was within sight. For a month or two, it even edged ahead of Hero in monthly volumes, just as the Gurugram-based company was navigating a major leadership transition.
Then the tide turned.
Vehicle registration data for calendar year 2025 show the gap between India's top two two-wheeler makers has widened again—to 7.85 lakh units, reversing the narrowing trend. Factory dispatch figures for the first nine months of FY26 tell a similar story. While both companies saw market share erode in a softening industry, Hero's relative performance proved stronger, allowing it to reassert its lead.
Three things can be credited with helping Hero MotoCorp protect its leads in 2025: a year-end policy boost to the entry-level segment, a renewed push in scooters, and gains in the EV market. Honda, meanwhile, found itself on the back foot across all three fronts.
The GST dividend
The entry-level motorcycle segment—Hero's traditional fortress—had been struggling with affordability pressures for years. Splendor, the workhorse that built the company's dominance, was losing sheen against a market shifting towards premium and scooters.
The GST rate cut on small-displacement two-wheelers changed that calculus. With prices becoming more accessible, demand in the sub-110cc category revived, and Hero was best positioned to capture it. Splendor made a strong comeback. The HF Deluxe Pro refresh added momentum. Hero gained market share in the entry-level category as the GST cut and festival season combined to fuel demand.
The gap between Hero and Honda narrowed in 2024 largely because Hero's focus was on the entry-level segment at a time when that segment was suffering. How sustainable the spurt in demand is in this segment, however, remains to be seen, given that the boost came from an external factor.
Scooter
Scooters have long been Hero's weak spot—contributing just 9% of domestic volumes compared to over 54% for Honda. In a market where scooters now account for 37% of total industry sales and are growing faster than motorcycles, that gap was becoming a structural liability.
During the year, Hero moved decisively to address it. Destini 125, Destini 110, and the Xoom 160 saw updates. Dispatches ramped up 45% year-on-year in April-December, lifting market share from 5.4% to 6.9%.
"In scooters, Hero MotoCorp has been outperforming peers on the back of healthy acceptance for products like Destini 125," Motilal Oswal noted in a recent report. Management has guided for 9% retail market share in scooters by March.
Honda, by contrast, is watching its iron grip on the segment slip. A couple of years ago, it commanded over 50% of the scooter market. That share has now dropped to 39%, down from 43.3% in the year-ago period, with TVS Motor and Hero both chipping away.
The problem is structural. Honda's scooter portfolio has effectively narrowed to a single franchise. Dio has failed to gain traction. Several models have been discontinued. Activa—once synonymous with Indian scooters—now carries the burden of defending more than half of Honda's domestic volumes almost single-handedly.
"Honda is heavily reliant on Activa to protect its overall volumes," one analyst tracking the sector observed. "And with rivals stepping up competition with a wider range of models, that's a precarious position."
EV Opportunities
Perhaps nowhere is the contrast between the fortunes of the two ex-partners starker than in electric vehicles.
During a year of considerable tumult in the EV market, Hero's Vida brand quietly emerged as a serious player. Sales more than doubled in calendar year 2025, crossing 1 lakh units—up around 150% from 2024. Market share doubled too, from 4% to 8.5%, placing Vida among the top five EV players. The trajectory was striking: from 1,626 units in January to a record 16,027 units in October, with monthly volumes exceeding 10,000 for the first time in July.
The launch of the VX2 at a starting price of Rs 84,800 and the introduction of Battery-as-a-Service helped broaden appeal. Expanded retail footprint brought in the rest of the momentum.
Honda took the opposite path. It launched two electric scooters in February—the Activa e with swappable batteries and the QC1. By August, production had stopped. The company hasn't manufactured either model since.
"One area where Honda may start losing ground is electric vehicles," said VG Ramakrishnan, managing partner at Avanteum Advisors. "Scooters are electrifying faster than other segments, and Honda risks losing its loyal Activa petrol customers to rivals if it does not build a strong presence in electric scooters."
Honda's management has said it is in no rush to flood the market with EVs, preferring to monitor early adopter experiences before scaling up.
As Honda treads cautiously, traditional ICE players now control more than half of India's electric two-wheeler market, and Hero—alongside Bajaj and TVS—has established an early lead that Honda will need to chase.
The Future Beckons
Meanwhile, the drama in the two-wheeler market has expanded beyond the fight between the No.1 and No.2, into areas such as EVs, premiumisation, exports and the emergence of a strong challenger in the form of TVS.
This shift is creating both risk and opportunity for both players.
The biggest trend that will affect both players is premiumisation. Despite the GST-spurt to the lower-end, demand growth is now strongest in the mid-size segment above 150cc, where TVS Motor and Royal Enfield are the primary beneficiaries.
Hero has responded with launches like the Xtreme 125 and Xpulse 210; as has Honda. But neither dominates this space the way they do their traditional segments.
Rural demand, however, could be Hero's trump card. As road connectivity improves across northern India, entry-level motorcycle demand in these markets is expected to pick up—and Hero's brand equity among value-conscious rural buyers remains unmatched.
"There's greater scope for Hero to gain market share as rural demand picks up," Ramakrishnan said. Conversely, he noted, Honda's strongholds in Tier-1 cities across the South and West could face headwinds as expanding metro networks reduce two-wheeler dependence in urban centres.
Paused, not settled
In 2025, Hero MotoCorp has bought itself breathing room. The GST tailwind, scooter resurgence, and Vida's momentum have combined to reverse what looked like an inexorable slide. Honda's stumbles—Activa fatigue, EV retreat, narrowing portfolio—have helped.
But the race is paused, not settled. Honda retains formidable strengths: brand loyalty, distribution depth, and the resources of a global parent. If it fixes its EV strategy and refreshes its scooter lineup, the gap could narrow again.
For now, though, the number one position that Honda's Tokyo management thought was within sight has moved further away. Hero, it turns out, still has some distance left in it.