The World is Riding on Indian 2-Wheelers: Growth Plans Ahead

Bajaj Auto became a financial powerhouse not because it chased global frontiers, but because it mastered the domestic queue.

Then came 1991. The economic liberalisation of India altered the climate. Global giants, specifically from Japan, entered the market through joint ventures. The modern consumer, freshly exposed to international standards, began to realise that the trusted family scooter was heavy, fuel-inefficient, and difficult to manoeuvre.

A quiet revolution was brewing in Punjab and Haryana. Brijmohan Lall Munjal, a man who started by trading bicycle components in Amritsar after the partition, had forged a partnership with Honda.

Hero Honda did something simple yet profound. It understood the psychological shift of the Indian commuter. The economy was expanding, but salaries were still modest. Fuel economy was not just a financial metric. It was an emotional security blanket.

Hero Honda launched the Sleek and then the Splendor with a marketing slogan that asked a simple question about fuel efficiency: Fill it, shut it, forget it.

The psychological impact of that four-stroke 100cc engine was immense. It turned the motorcycle from a luxury or a niche enthusiast product into a mass utility tool.

The rural economy, long disconnected from urban centres due to poor infrastructure, suddenly found a reliable bridge. Hero Honda rode this wave to become the largest 2-wheeler manufacturer in the world by volume, demonstrating that in an emerging market, reliability and low cost of ownership beat raw performance every single time.

While Hero Honda captured the pragmatic, efficiency-first consumer, another legacy player was fighting for survival in the southern state of Tamil Nadu.

TVS Motors, led by Venu Srinivasan, had historically built a reputation for engineering excellence through its mopeds. However, its partnership with Suzuki was fraying. When the two companies parted ways in 2001, many analysts believed TVS would collapse under the weight of Japanese engineering dominance.

Srinivasan did not retreat. He turned to local research and development (R&D) committing substantial capital to design an entirely indigenous motorcycle. The launch of the TVS Victor in 2001 proved that an Indian company could match global engineering standards on its own.

TVS survived by building a multi-segment strategy, balancing the commuter market with a premium performance angle through its Apache series.

By the late 2000s, another major mutation occurred.

Bajaj Auto, under the leadership of Rajiv Bajaj, made a counter-intuitive choice that shocked the domestic market. He decided to stop manufacturing the iconic Chetak scooter entirely.

It was an act of corporate creative destruction. Bajaj recognized that the scooter market had become a commodity trap and that the future of global expansion lay in distinct, high-margin motorcycle brands.

Bajaj pivoted aggressively to the Pulsar brand, creating the sports-commuter segment in India.

Furthermore, Bajaj looked beyond the geography of the subcontinent. He weaponised a capital-light international strategy, taking a significant stake in KTM of Austria and establishing dominant market shares in Africa, Latin America, and Southeast Asia. Today, every third vehicle Bajaj produces is exported. This has turned the company into a major foreign exchange earner.

This historical trajectory brings the industry to its current, most volatile frontier.

The traditional internal combustion (IC) engine faces a dual challenge from regulatory mandates and the rise of electric mobility. This transition mirrors the global shift seen in the smartphone industry during the late 2000s, where legacy handset makers were blindsided by software-driven entrants.

The three domestic 2-wheeler majors handled this electric vehicle pivot not with defensive retreat, but with strategic aggression.

Initially, agile tech startups like Ola Electric disrupted the landscape with massive capital pools, yet the incumbents weaponized their immense manufacturing scale and institutional trust. Rather than rushing experimental prototypes to market, they built dedicated electric ecosystems while leveraging their massive internal cash flows.

Bajaj Auto resurrected its legendary nameplate as an electric avatar, building a sophisticated supply chain around the Chetak EV.

Hero MotoCorp established its premium incubator brand, Vida, opting for a meticulous, quality-first ramp-up.

TVS took a mainstream approach, positioning its iQube family not as a radical technology experiment, but as a practical, familiar household upgrade. This institutional execution paid off dramatically.

When software glitches and after-sales crises crippled the early startup market leaders, consumers aggressively gravitated back to traditional emblems of trust.

This transition required immense pricing power to preserve corporate balance sheets. In the early stages of adoption, manufacturing electric vehicles was structurally dilutive to legacy margins.

However, the Big Three masterfully deployed a dual-track strategy. They raised prices on their premium internal combustion models, such as the Bajaj Pulsar, Hero Splendor, and TVS Apache lines, effectively using their legacy cash cows to subsidize their clean energy infrastructure.

As the central government tapered its Faster Adoption and Manufacturing of Electric Vehicles (FAME) subsidies, the incumbents used their pricing power to protect profitability.

Instead of joining a destructive price war, they expanded their electric portfolios across diverse pricing tranches, offering entry-level battery capacities alongside high-margin, hyper-connected flagship variants.

Simultaneously, these corporations had to navigate highly volatile geopolitical currents.

The post-pandemic world shattered traditional, single-nation supply chains. Volatile freight corridors, semiconductor chokepoints, and sudden component shortages threatened to stall manufacturing lines.

To counter this, the Indian majors initiated a massive, localised decoupling strategy.

Bajaj insulated its operations by deepening its alliances with Triumph and KTM, ensuring mutual access to global engineering talent and diversified sourcing hubs.

Hero MotoCorp expanded its technical capabilities through its advanced innovation center in Germany. It established manufacturing partnerships with Harley-Davidson.

The true standout of this structural transformation has been TVS Motor Company, an entity currently firing on all operational cylinders.

In an environment where peers frequently sacrificed volume expansion to maintain absolute pricing control, TVS captured both levers simultaneously. Its financial metrics tell a story of sheer operating leverage. It expanded its operating margins from 6% in FY16 to 15% in FY26, driving its return on equity (ROE) from 21% to 33%.

TVS' EV rollout has been a masterclass in market capture.

During FY26, TVS became the largest legacy electric two-wheeler manufacturer in the country, with domestic sales capturing an expansive 24.36% market share and outpacing the electric Chetak volumes of Bajaj and the Vida volumes of Hero.

To defend and extend this market leadership, TVS deployed a relentless capital allocation strategy, into domestic capex, strategic subsidiaries, European e-bike assets and the iconic Norton brand.

The Indian 2-wheeler industry has transitioned from an era of 10-year waiting lists for a single foreign-derived scooter to a multi-billion-dollar global export engine. It survived the shock of liberalization and defeated global incumbents on its home turf.

It is now actively leading the transition to electric mobility.

The journey proves that long-term industrial survival belongs neither to the strongest nor to the most capital-flush, but to the entity that adapts most rapidly to structural shifts in technology and consumer behaviour.

As Indian 2-wheelers expand across Africa, Europe, and Latin America, the industry is no longer just riding the wave of global mobility. It is actively steering it.

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Warm regards,


Tanushree Banerjee
Editor, StockSelect
Quantum Information Services Private Limited (Research Analyst)