Honda's aggressive motorcycle pivot delivers 23% revenue growth and shrinks the gap with Hero MotoCorp to just ₹1,500 crore, as Shine 125cc dominates the booming executive segment and reshapes India's two-wheeler hierarchy.
20 Oct 2025 | 3819 Views | By Ketan Thakkar & Ashutosh R Shyam
In an industry dominated for years by a few legacy players, Honda Motorcycle & Scooter India (HMSI) is making a bold bid to rewrite the competitive order. By pivoting aggressively toward the motorcycle segment, the Japanese‑owned subsidiary is reaping the rewards in market share, margin expansion, and profitability. The story ...
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In an industry dominated for years by a few legacy players, Honda Motorcycle & Scooter India (HMSI) is making a bold bid to rewrite the competitive order. By pivoting aggressively toward the motorcycle segment, the Japanese‑owned subsidiary is reaping the rewards in market share, margin expansion, and profitability. The story unfolding in FY25 underscores not only the power of strategic focus but also the tectonic shifts underway in India’s two‑wheeler landscape.
Strategic Shift: From Scooter Heavy to Bike Balanced
For a long time, Honda’s strength in India lay in its scooters—a reliable, urban mobility anchor. But as incomes rise and consumer preferences evolve, the appetite for motorcycles (especially in the 125 cc executive segment) has surged. Recognizing that shift, HMSI tilted decisively toward bikes, and today, that tilt is delivering rich dividends.
This reorientation has translated into one of the highest revenue growth rates among leading two‑wheeler firms. Volume expansion, especially in the motorcycle unit, is the engine behind the numbers. In simple terms: Honda bet on bikes, and it’s winning.
A Tale of Two Rivals: HMSI vs Hero Motocorp
Headquartered in Gurugram, HMSI is the Indian arm of Japan’s Honda Motor. In FY25, the company clocked revenues of ₹39,237 crore, a robust 22.83 percent jump over ₹31,945 crore in FY24. Contrast that with India’s largest two‑wheeler maker, Hero Motocorp, which posted only 8.8 percent growth in the same year—achieving revenue of ₹40,756 crore.
Over a five‑year horizon, HMSI’s compound annual growth rate (CAGR) in revenue stands at nearly 11 percent, while Hero lags at 7 percent. Though the industry at large has expanded in tandem, HMSI’s consistency and momentum set it apart. Meanwhile, TVS Motor holds the crown for the highest five‑year CAGR among peers, with revenue reaching ₹36,225 crore in FY25.
One stark indicator of the shifting balance: In FY19, HMSI’s revenue was just 77 percent of Hero’s; by FY25, it surged to 96.2 percent. The absolute difference in revenues has shrunk from ₹7730 crore in FY19 to just over ₹1,500 crore in FY25.
Volume Wars: Narrowing the Gap
Beyond revenue, the volume numbers tell a dramatic story. HMSI registered a 19 percent year-on-year volume increase in FY25, reaching 58.31 lakh units, up from 48.93 lakh in FY24. Hero’s growth, by comparison, was a modest 4.9 percent, hitting 58.99 lakh units.
What was once a staggering gap of 19 lakh units in FY19 has shrunk to just 68,083 units in FY25. In other words, HMSI’s volume is now 98.85 percent of Hero’s—up from 75.45 percent in FY19.
The domestic market also painted a bullish picture: total volume was 53.26 lakh units, up 17.5 percent year over year. Within that, motorcycles soared 24.14 percent to 24.82 lakh units, while scooters rose 12.40 percent to 28.44 lakh units. Crucially, the “bike share” of total domestic volumes expanded from 33 percent in FY20 to 47 percent in FY25.
The Shine 125cc Effect: Powering Honda’s Gains
Honda’s resurgence in the motorcycle space is driven in large part by one model: Shine 125cc. This executive‑segment bike has emerged as a linchpin for HMSI’s volume strategy. In FY25, the executive bike segment’s volume rose 25 percent to 16.32 lakh units, largely fuelled by Shine’s performance.
In the 125cc executive category, Shine commands a 45.4 percent market share. Over five years, its volume has grown at 11.48 percent CAGR, outpacing the industry’s 9 percent CAGR in the same period.
Another contender in this segment is Bajaj’s Pulsar 125cc, which delivered 7.96 lakh units in FY25—translating to a 24.2 percent market share. Still, the upward shift in executive‑segment bikes has been a key trend, with the entire <125cc bike segment hitting 35.98 lakh units, representing 18 percent of the two‑wheeler industry—up from 9 percent in FY19. Meanwhile, the entry‑level (economy) bike space saw a contraction of 2.3 percent CAGR over the same span, a segment long dominated by Hero.
In the premium bike domain (generally >150 cc), HMSI is staking its claim too. FY25 saw premium volumes jump 35 percent to 4.66 lakh units, up from 3,46,180 units the previous year. HMSI’s share in that segment climbed from 11.7 percent in FY20 to 15.6 percent in FY25, primarily driven by Unicorn 150, which holds 10.3 percent market share in premium bikes.
By contrast, Hero Motocorp’s offerings in the executive bike segment—Glamour and Super Splendor—are under duress. Glamour’s volume nosedived from 6,02,623 units in FY20 to 1,78,313 in FY25, while Super Splendor dropped to 2,33,047 units from 5,69,652. Hero’s executive-segment share plunged from 50.3 percent in FY20 to 19.3 percent in FY25.
Though smaller, HMSI’s export arm is also contributing meaningfully. In FY25, Honda exported 5,05,012 units, up from 3,26,369 units in FY20. Scooter exports, in particular, climbed to 3,11,977 units, from 1,91,478 over the same period.
Hero’s Stronghold: Splendor in the Entry Segment
Despite these headwinds, Hero still commands deep loyalty in the economy bike segment, anchored by its perennial bestseller, Splendor. FY25 saw record volumes of 32.65 lakh units, growing 8.79 percent year on year. That performance secured Hero a 78.7 percent share of the economy segment in FY25.
Yet, the broader economy segment is under pressure: industry-wide volume in this bracket slipped 19 percent over five years, remaining essentially flat at 56.57 lakh units. Its contribution to the domestic mix fell from 37 percent in FY20 to 29 percent in FY25.
Price Realization and Margins: A Trade-Off
As Honda’s mix tilts more heavily toward bikes, its average realization per vehicle has dipped slightly. In FY25, HMSI achieved ₹67,290 per unit, versus ₹69,088 for Hero. Over five years, Hero’s per-unit realization grew at 8.96 percent CAGR, compared with 7.64 percent for HMSI.
But Honda is offsetting the pricing compromise with scale and cost control. The company’s gross profit per vehicle rose to ₹21,462 in FY25, up from ₹20,657, translating into a gross margin of 31.90 percent—a gain of about 30 basis points.
Hero’s gross margin in FY25 stood at 33.6 percent, with ₹23,203 per unit. However, the higher revenue base and deeper localization helped Hero sustain more margin, albeit with lower growth.
On the operating front, HMSI’s EBITDA jumped 32.66 percent to ₹5,340 crore, while Hero saw 11.64 percent growth to ₹5,867 crore. Over five years, Honda’s EBITDA margin expanded by 216 basis points, reaching 13.6 percent in FY25. Hero, meanwhile, grew by 67 basis points to 14.40 percent. In FY21, HMSI’s margin was nearly half of Hero’s; today, it is steadily closing the gap using operating leverage and disciplined cost control.
On a per-vehicle basis, HMSI generated ₹9,159 in operating profit, while Hero delivered ₹9,947. The margin delta persists, but Honda’s upward trajectory is evident.
Profitability: Closing the Gap
HMSI’s net profit in FY25 soared 37.7 percent to ₹3,726 crore, outpacing industry growth (around 18 percent) and emerging as the highest growth among leading two‑wheeler makers. Hero’s profit rose 13 percent to ₹4,610 crore. Accordingly, the ratio of Honda’s profits to Hero’s widened to 80.84 percent in FY25, from just 51 percent in FY21.
That evolution speaks volumes: Honda is learning to compete profitably in India—landing in the sweet spot of product, volume, and operational efficiency. On a per-unit profit basis, Honda earned ₹6,391, while Hero captured ₹7,814, and TVS Motor trailed at ₹5,713.
What This Shift Means for the Industry
Honda’s results herald more than just a competitive upset—they signal an inflection point in the two-wheeler sector:
Challenges and Watchpoints
Despite the many positives, Honda’s path ahead is not without hurdles:
If FY25 teaches us anything, it’s that a bold strategic bet—properly executed—can produce leveling shifts in entrenched markets. HMSI’s tilt toward motorcycles is not just paying off in volumes and revenues but is closing a years-old prestige and profit gap with Hero Motocorp.
Yet the victory is not assured. As Honda evolves from challenger to co-leader, it must preserve the discipline, agility, and brand resonance that got it here. In India’s fast-moving two-wheeler ecosystem, today’s gains are only safe if tomorrow’s innovations continue to hit the mark.