Bajaj Auto Sees Steady Two-Wheeler Demand in Coming Months After GST Boost

Bajaj Auto expects domestic two-wheeler demand to remain healthy over the next few months, supported by improving consumer sentiment after GST rationalisation, and a shift towards higher-value products.

“Immediate term, the next three to four months look good,” Rakesh Sharma, Executive Director at Bajaj Auto, said during a media call to discuss the company’s December quarter performance. Seasonality is expected to support demand, with January aided by festivals, February typically softer, and March seeing a pickup driven by the wedding season in northern India, he added.

He said December and January were the key months to judge the impact of the GST changes. Earlier months were distorted by delayed purchases and festive demand bunching together.

GST rationalisation was announced in mid-August and implemented in late September. Buyers held back purchases in anticipation of lower prices. This created pent-up demand that mixed with the festive season in October and November.

According to Sharma, that made it hard to isolate the real demand trend. “But when you look at December and January, in the motorcycle business they move from minus 1% to 12-15% kind of number…The industry seems to be in that trajectory,” he said.

He added that higher displacement motorcycles are doing much better than entry-level bikes.

Three-wheelers have also rebounded. Internal combustion engine (ICE) three-wheelers swung from contraction to mid-single-digit growth. “I expect this should continue,” Sharma said.

Electric scooter sales slowed during the festive rush as buyers gravitated to cheaper ICE models after the tax cut. But growth has normalised again. “I’ve seen EV growth rates returning to the normal growth rates of about 15 to 20%,” he said.

Uptrading Drives “Quality of Growth”

According to Sharma, the GST-led price correction has triggered a cascading upgrade across segments. “People who are buying 100cc, there is a general uptrading trend,” he said. Some buyers moved from used to new two-wheelers, while a few at the top end upgrade to cars.

“It’s not just the quantum of growth, but it’s also the quality of growth, which has provided a very supportive environment to better products,” he said. Entry-level bikes have benefited the least, while premium and higher-cc products have gained more traction.

Sharma said the positive effect of GST reform will sustain as long as inflation stays under control. “It will last as long as inflation does not erode the purchasing power,” he said.

Two-wheeler buyers are highly price sensitive. “The average income of my customer is Rs 40,000 per month. Every Rs 1,000, Rs 2,000 makes a big difference,” he said adding, if fuel and rental costs rise sharply, they could wipe out the benefit of lower vehicle prices.

Exports Resilient Despite Global Disruptions

On exports, Sharma said volatility in individual markets is normal for emerging market players. “Disruption is a way of life for us. Something is doing well, something is not doing well,” he said.

Recent tariff changes in Mexico will have a limited impact on Bajaj Auto as it manufactures locally through partners. “These levies don’t apply to us because there’s total manufacturing taking place. Our duties are around 3% import duty. Rest of the folks now have to pay 20%,” he said.

Issues in smaller markets such as South Africa and Nepal are not material to the overall business, he added.

Overall, the company sees exports staying on a firm footing alongside domestic demand, supported by product upgrades and a gradual recovery in electric volumes. “Immediate term looks quite positive,” Sharma said.

Q3 FY26 Sales

Bajaj Auto reported a steady improvement in volumes in the third quarter of FY26, aided by a recovery in exports and modest growth in the domestic market.

Total sales in the December quarter stood at 1.34 million units, up 10% year-on-year from 1.22 million units in Q3 FY25. On a sequential basis, volumes rose 4% compared with 1.29 million units in Q2 FY26.

Two-wheeler sales grew 7% year-on-year to 1.13 million units in the December quarter, from 1.05 million units a year earlier. Commercial vehicle volumes, which largely comprise three-wheelers, jumped 23% year-on-year to 208,869 units in Q3 FY26, compared with 169,851 units in Q3 FY25. 

During the quarter, the company’s domestic performance was relatively muted. Domestic two-wheeler sales rose 2% year-on-year to 601,208 units, while commercial vehicle sales in the home market increased 9% to 129,829 units. Even so, total domestic volumes at 731,037 units were only 3% higher than a year ago and 1% lower than the previous quarter, reflecting a softer rural and entry-level demand environment.

Exports were the main growth driver. Two-wheeler exports surged 14% year-on-year to 531,175 units, while commercial vehicle exports jumped 56% to 79,040 units. Overall exports rose 18% to 610,215 units compared with Q3 FY25.