Page 16
- C. Non- Financial Operational Measures
Following are the non- financial operational measures identified in “Basis for Offer Price” and “Our Business” beginning on
pages 149 and 302, respectively.
Technical, Industry related Terms or Abbreviations
CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
Certain Conventions
All references to “India” contained in this Draft Red Herring Prospectus are to the Republic of India and its territories and
possessions and all references herein to the “Government”, “Indian Government”, “GoI”, “Central Government” or the “State
Government” are to the Government of India, central or state, as applicable.
All references to the:
“U.S.”, “US”, “U.S.A.” or “United States” are to the United States of America and its territories and possessions.
“U.K” or “United Kingdom’ is to the United Kingdom and its territories and possessions.
“Thailand” or “the Kingdom of Thailand” refers to Thailand and its territories and possessions.
In this Draft Red Herring Prospectus, unless otherwise specified:
- • any time mentioned is in IST;
- • all references to a year are to a calendar year unless mentioned as financial year or Fiscal; and
- • all references to page numbers are to the page numbers of this Draft Red Herring Prospectus.
Financial Data
Unless stated otherwise or the context otherwise requires, the financial information and financial ratios in this Draft Red Herring
Prospectus have been derived from our Restated Consolidated Financial Information. For further information, see “Restated
Consolidated Financial Information” on page 418.
Our Company’s financial year commences on April 1 and ends on March 31 of the next year. Accordingly, all references in
this Draft Red Herring Prospectus to a particular Financial Year, Fiscal or Fiscal Year, unless stated otherwise, are to the 12-
month period commencing on April 1 of the immediately preceding calendar year and ending on March 31 of that particular
calendar year.
Unless the context requires otherwise, the financial information in this Draft Red Herring Prospectus is derived from the restated
consolidated financial information of our Company and our Subsidiaries as at and for the nine months period ended December
31, 2024 and as at and for the years ended March 31, 2024, March 31, 2023 and March 31, 2022 comprising the restated
consolidated statement of assets and liabilities as at December 31, 2024, March 31, 2024, March 31, 2023 and March 31, 2022,
the restated consolidated statements of profit and loss (including other comprehensive income), the restated consolidated
statements of changes in equity, the restated consolidated statements of cash flows, each for the nine month period ended
December 31, 2024 and for the years ended March 31, 2024, March 31, 2023 and March 31, 2022, the summary statement of
material accounting policies and other explanatory information, prepared as per the requirement of Section 26 of Part I of
Chapter III of the Companies Act, 2013, SEBI ICDR Regulations, and the Guidance Note on ‘Reports in Company Prospectuses
(Revised 2019)’ issued by the Institute of Chartered Accountants of India (“ICAI”), as amended. For further information, see
“Summary of Financial Information”, “Restated Consolidated Financial Information” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” beginning on pages 85, 418 and 490, respectively.
There are significant differences between Ind AS, U.S. GAAP and IFRS. Our Company does not provide reconciliation of its
financial information to IFRS or U.S. GAAP. Our Company has not attempted to explain those differences or quantify their
impact on the financial data included in this Draft Red Herring Prospectus and it is urged that you consult your own advisors
regarding such differences and their impact on our financial data. Accordingly, the degree to which the financial information
included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level
of familiarity with Indian accounting policies and practices, the Companies Act, Ind AS and the SEBI ICDR Regulations. Any
reliance by persons not familiar with Indian accounting policies and practices on the financial disclosures presented in this Draft
Red Herring Prospectus should, accordingly, be limited. For risks relating to significant differences between Ind AS and other
accounting principles, see “Risk Factors – Significant differences exist between Ind AS and other accounting principles, such
as U.S. GAAP and IFRS, which investors may be more familiar with and may consider them material to their assessment of our
financial condition.” on page 75.
Unless the context otherwise indicates, any percentage amounts or ratios (excluding certain operational metrics), relating to the
financial information of our Company in this Draft Red Herring Prospectus have been calculated on the basis of amounts
derived from our Restated Consolidated Financial Information.
Non-GAAP Financial Measures
Page 26
For discussion regarding factors that could cause actual results to differ from expectations, see “Risk Factors”, “Industry
Overview”, “Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
on pages 39, 179, 302, and 490, respectively. By their nature, certain market risk disclosures are only estimates and could be
materially different from what actually occurs in the future. As a result, actual gains or losses could materially differ from those
that have been estimated.
There can be no assurance to Bidders that the expectations reflected in these forward-looking statements will prove to be correct.
Given these uncertainties, Bidders are cautioned not to place undue reliance on such forward-looking statements and not to
regard such statements to be a guarantee of our future performance.
Forward-looking statements reflect our current views as of the date of this Draft Red Herring Prospectus and are not a guarantee
of future performance. These statements are based on our management’s beliefs and assumptions, which in turn are based on
currently available information. Although we believe the assumptions upon which these forward-looking statements are based
are reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking statements based on these
assumptions could be incorrect. Neither our Company, our Directors, KMPs, the Selling Shareholders, the Syndicate nor any
of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising
after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.
In accordance with the requirements of SEBI, our Company shall ensure that investors are informed of material developments
from the date of the Red Herring Prospectus in relation to the statements and undertakings made by our Company and each of
the Selling Shareholders, severally and not jointly, in relation to themselves as a Selling Shareholder and their respective portion
of the Offered Shares in this Draft Red Herring Prospectus until the time of the grant of listing and trading permission by the
Stock Exchanges for the Offer. In this regard, each of the Selling Shareholders shall, severally and not jointly, ensure that our
Company and the Book Running Lead Managers are informed of material developments in relation to the statements and
undertakings specifically confirmed or undertaken by such Selling Shareholder in relation to themself as a Selling Shareholder
and their respective portion of the Offered Shares in the Red Herring Prospectus until the time of the grant of listing and trading
permission by the Stock Exchanges for the Offer.
SECTION II: RISK FACTORS
An investment in our Equity Shares involves a high degree of risk. Potential investors should carefully consider all the
information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before making an
investment in the Equity Shares pursuant to the Offer.
We have described the risks and uncertainties that we believe are material, but these risks and uncertainties may not be the
only risks relevant to us, the Equity Shares, or the industry in which we currently operate or propose to operate in. Additional
risks and uncertainties, not currently known to us or that we currently do not deem material may arise or may become material
in the future and may also adversely affect our business, results of operations, financial condition and cash flows. If any or a
combination of the following risks, or other risks that are not currently known or are not currently deemed material, actually
occur, our business, results of operations, financial condition and cash flows could be adversely affected, the price of our Equity
Shares and the value of your investments in our Equity Shares could decline, and investors may lose all or part of their
investment. In order to obtain a complete understanding of our Company and our business, prospective investors should read
this section in conjunction with “Industry Overview”, “Our Business”, “Restated Consolidated Financial Information” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 179, 302, 418 and 490,
respectively, as well as the other financial and statistical information contained in this Draft Red Herring Prospectus.
In making an investment decision, prospective investors must rely on their own examination of us and our business and the
terms of the Offer including the merits and risks involved. Potential investors should consult their tax, financial and legal
advisors about the particular consequences of investing in the Offer. The financial and other related implications of risks
concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. Unless specified or quantified in
the relevant risk factors below, we are unable to quantify the financial or other impact of any of the risks described in this
section. Prospective investors should pay particular attention to the fact that our Company is incorporated under the laws of
India and is subject to a legal and regulatory environment, which may differ in certain respects from that of other countries.
Unless otherwise stated, or the context otherwise requires, any reference to “the Company” or “our Company” refers to our
Company on a standalone basis, and a reference to “we”, “us” or “our” refers to our Company together with our Subsidiaries,
on a consolidated basis.
This Draft Red Herring Prospectus also contains certain forward-looking statements that involve risks, assumptions, estimates
and uncertainties. Our actual results could differ from those anticipated in these forward-looking statements as a result of
certain factors, including the considerations described below and elsewhere in this Draft Red Herring Prospectus. For further
information, see “Forward-Looking Statements” on page 20.
Unless otherwise indicated, the financial information included herein is based on our Restated Consolidated Financial
Information included in this Draft Red Herring Prospectus. For further information, see “Restated Consolidated Financial
Information” on page 418.
Unless otherwise indicated, industry and market data used in this section has been derived from the industry report titled
“Industry assessment – Powertrain Solutions and Alloys & Metallics Components” dated March 2025 (the “CRISIL Report”),
exclusively prepared and issued by CRISIL Intelligence, who were appointed by our Company pursuant to an engagement letter
dated December 20, 2024, and the CRISIL Report has been exclusively commissioned by and paid for by our Company. The
CRISIL Report is available at the website of our Company at
https://www.heromotors.com/cpage.aspx?mpgid=30&pgidtrail=34. Unless otherwise indicated, financial, operational,
industry and other related information has been derived from the CRISIL Report and such information included herein with
respect to any particular year refers to such information for the relevant calendar year. Industry sources and publications are
also prepared based on information as of specific dates and may no longer be current or reflect current trends. Industry sources
and publications may also base their information on estimates, projections, forecasts and assumptions that may prove to be
incorrect. Accordingly, investors must rely on their independent examination of, and should not place undue reliance on, or
base their investment decision solely on this information. The recipient should not construe any of the contents in this report as
advice relating to business, financial, legal, taxation or investment matters and are advised to consult their own business,
financial, legal, taxation, and other advisors concerning the transaction. Also see, “Certain Conventions, Presentation of
Financial– Industry and Market Data” on page 17 for additional details regarding the industry and market data used in this
Draft Red Herring Prospectus.
Internal Risk Factors
- 1. We generate a portion of our revenue from operations from jurisdictions outside India, in particular, from Europe
which contributed 26.27%, 29.33%, 32.47% and 29.34% of our revenue from operations, in the nine months ended
December 31, 2024 and Fiscal 2024, 2023 and 2022, respectively. Any adverse events affecting these jurisdictions could
have an adverse impact on our revenue from operations.
Page 49
- 7. We may not be able to compete effectively in the global powertrain solutions industry which could have a material
adverse effect on our business, financial condition, results of operations and cash flows.
We compete globally with many other businesses that operate in powertrain solutions and alloys and metallics industry.
According to the CRISIL Report, the global two-wheeler market, comprising motorcycles and scooters, witnessed a period of
contrasting fortunes between 2019 and 2024. We are particularly affected by factors impacting the premium two-wheeler OEMs
globally. While fuel efficiency reigns, demand for higher cc motorcycles is rising globally, even in developing economies.
Younger riders prioritize power and performance, while some cultures associate large motorcycles with freedom and status.
Global demand for higher cc (>600 cc) motorcycles increased from approximately 12% in 2019 to approximately 13% in 2023
of the overall motorcycle sales. In developing economies, a surge in disposable income has fuelled the demand for higher cc
motorcycles, catering to a desire for touring and recreational riding. (Source: CRISIL Report)
The table below sets forth key players in our respective product segments as per the CRISIL Report:
During the nine months ended December 31, 2024 and Fiscal 2024, while our revenue from operations was ₹ 8,099.45 million
and ₹ 10,643.86 million, respectively, we face competition from larger organisations who possess greater financial resources,
patents and underutilized capacity. Major players such as Bafang Electric, and Hyena in the hub motors category operate out
of China and we may not efficiently compete with them on account of lower labour costs, lower tax rates, and export or raw
materials subsidies which they may receive. We cannot assure you that we will be able to compete successfully in the future
against our existing or potential competitors or that our business and results of operations will not be adversely affected by
increased competition. For further information, see “Our Business - Competition” on page 347.
- 8. Our inability to maintain and protect our brand and business reputation could adversely affect our business, prospects
and financial performance.
Our business reputation and brand are important to the success of our business. Various factors, some of which are beyond our
control, are critical for maintaining and enhancing our brand. These include our ability to effectively manage the quality of our
products and address grievances, increase brand awareness among existing and potential customers, adopt new technologies or
adapt our systems to customer requirements or emerging industry standards, and protect the intellectual property related to our
brand.
In addition, we share the trademark and name ‘Hero’ with other entities within the Munjal group, pursuant to a trademark and
name agreement dated May 20, 2010. Under the agreement, our Promoter, Pankaj Munjal’s family has the right to use the
trademark and name ‘Hero’ in relation to the business undertaken by our Company only as long as minimum 26% of our
shareholding is owned by Pankaj Munjal’s family. In the event we are unable to continue to use our trademark or name, we
may be required to build our name recognition afresh or if there is any negative publicity surrounding the Hero brand on account
of these entities, our brand image can be harmed, which could adversely affect our business, financial condition and results of
operations.
We have also applied for registration over the trademark logo “ ” (device mark) and wordmark “Hero
Motors” in Classes 12, 35, 40 and 42 under the provisions of the Trademarks Act, 1999, as amended, which are currently
pending. Further, certain trademarks filed by our Company have been opposed or objected or are under formality check stage.
For further information, see “Our Business – Intellectual Property and “Government and Other Approvals – Intellectual
Property” on pages 343 and 545, respectively. There can be no assurance that we will be able to register our trademark and the
logo or that third parties will not infringe our intellectual property, causing damage to our business prospects, reputation and
goodwill. For further details, see also “ - We may be unable to adequately protect our intellectual property and may be subject
to risks of infringement claims.” on page 53.
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Our brand could also be harmed if our services fail to meet the expectations of our customers, if we fail to maintain our
established standards or if we become the subject of any negative media coverage. Our failure to develop, maintain and enhance
our brand may result in decreased revenue and loss of customers, and in turn adversely affect our business, financial condition
and results of operations.
- 9. Our manufacturing facilities and technology centres are subject to operating risks. Any shutdown of our existing
technology centres and manufacturing facilities or future technology centres and manufacturing facilities or any other
operational problems caused by unforeseen events may reduce sales, market share and adversely affect our business,
cash flows, results of operations and financial condition.
Page 156
* To be computed after finalization of Price Band
Notes:
- i) P/E ratio = Price per equity share / Earnings per equity share.
- C. Industry Peer Group P/E ratio
The industry high and low has been considered from the industry peer set provided later in this chapter. For further
details, see “Basis for Offer Price Comparison of Accounting Ratios with Listed Industry Peers” beginning on page
151.
The industry P/E ratio mentioned above is computed based on the closing market price of equity shares on BSE on
June 26, 2025 divided by the Diluted EPS as on for the financial year ended March 31, 2024.
- D. Return on Net worth (“RoNW”)
^not annualised
Notes:
- i) Weighted average = Aggregate of year-wise weighted RoNW divided by the aggregate of weights i.e. (RoNW x Weight) for each year/Total
of weights.
- ii) Return on Net Worth (%) = Net Profit after tax, as restated / Restated net worth at the end of the year/period.
- iii) ‘Net-worth: Net worth is the aggregate value of the paid-up share capital and all reserves created out of the profits, securities premium
account, compulsory convertible cumulative preference shares, share application money pending allotment, demerger adjustment deficit
account, shares options outstanding and debit or credit balance of profit and loss account as per the audited balance sheet, but does not
include foreign currency translation reserve, capital reserve .
- iv) The figures disclosed above are based on the Restated Consolidated Ind-AS Financial Statements of the Company.
- E. Net Asset Value (“NAV”) per Equity Share
* To be computed after finalization of price band
Notes:
- i) Net asset value per share represents Net assets divided by total number of shares at the end of the year.
- ii) Net assets is total assets minus current liability minus non-current liability minus capital reserve minus foreign currency translation reserve
minus non-controlling interest. Total number of shares at the end of the year is the number of equity shares outstanding at the end of the year
plus weighted average number of potential equity shares on account of compulsory convertible preference shares / share pending issue
- F. Comparison of accounting ratios with Listed Industry Peers
Page 157
Source: All the financial information for listed industry peers mentioned above is on a consolidated basis (unless otherwise available only
on standalone basis) and is sourced from the annual reports / annual results as available of the respective company for the financial year
ended March 31, 2024 submitted to stock exchanges.
Notes:
- i) Basic/diluted earnings per share refers to the basic/diluted earnings per share sourced from the financial statements of the respective
peer group companies for the financial year ended.
- ii) Net asset value per equity share = Net asset value per share represents Net assets divided by total number of shares at the end of the
year. Net assets is total assets minus current liability minus non-current liability minus capital reserve minus foreign currency
translation reserve minus non-controlling interest. Total number of shares at the end of the year is the number of equity shares
outstanding at the end of the year plus weighted average number of potential equity shares on account of compulsory convertible
preference shares / share pending issue
- iii) Price/earnings ratio for the peer group has been computed based on the closing market price of equity shares on BSE as on June 26,
2025, divided by the diluted earnings per share for financial year ended March 31, 2024.
- iv) Return on Net Worth is calculated as Profit for the period / year as a percentage of Net Worth.
- v) In relation to CIE Automative India Ltd., please read Financial Year 2024 as Calendar year 2023.
- G. Key Performance Indicators
The tables below set forth the details of our certain financial data based on our Restated Consolidated Financial
Information, certain non-GAAP measures and KPIs that our Company considers have a bearing for arriving at the basis
for Offer Price. The KPIs disclosed below have been approved by a resolution of our Audit Committee dated June 30,
2025, and the Audit Committee has confirmed that other than the KPIs set out below, our Company has not disclosed any
other KPIs to investors at any point of time during the three years period prior to the date of this Draft Red Herring
Prospectus. The KPIs disclosed below have been used historically by our Company to understand and analyse its business
performance, which helps in analysing the growth of various verticals in comparison to our Company’s listed peers, and
other relevant and material KPIs of the business of our Company that have a bearing for arriving at the Basis for Offer
Price. The KPIs disclosed below have been certified by Ramesh C Agrawal & Co., Chartered Accountants, pursuant to
certificate dated June 30, 2025 which has been included in “Material Contracts and Documents for Inspection—Material
Documents” on page 490.
The list of our KPIs along with brief explanation of the relevance of the KPI for our business operations are set
The restated profit for the year is including the pre-tax non cash share based payment of ₹ 394.62 million in Fiscal 2024 and ₹133.50
million in Fiscal 2023 and exceptional income of ₹ 657.41 million in Financial Year 2022.
- J. Operational parameters
Set forth below is a comparison of Business Segment Revenue wise bifurcation with our listed peer group
companies:
Page 164
Source: CRISIL Report
* In relation to CIE Automative India Ltd., please read (a) Financial Year 2022 as Calendar year 2021; (b) Financial Year 2023 as
Calendar year 2022; and (c) Financial Year 2024 as Calendar year 2023.
Set forth below is a comparison of other Operational KPIs with our listed peer group companies:
Page 165
Source: All the information for the listed peers mentioned above is sourced from audited financial statements, annual reports or investor
presentations as submitted to the stock exchanges
* In relation to CIE Automative India Ltd., please read (a) Financial Year 2022 as Calendar year 2021; (b) Financial Year 2023 as Calendar year
2022; and (c) Financial Year 2024 as Calendar year 2023.
^ The Revenue from operations from domestic customers includes revenue from Mexico as well
Weighted average cost of acquisition ("WACA"), floor price and cap price
- 1. Price per share of our Company (as adjusted for corporate actions, including split, bonus issuances) based
on primary issuances of Equity Shares or convertible securities (excluding Equity Shares issued under the
ESOP 2022) during the 18 months preceding the date of this Draft Red Herring Prospectus, where such
issuance is equal to or more than 5% of the fully diluted paid-up share capital of our Company in a single
transaction or multiple transactions combined together over a span of rolling 30 days (“Primary
Issuances”)
Our Company has not issued any Equity Shares, during the 18 months preceding the date of this Draft Red
Herring Prospectus, where such issuance is equal to or more that 5% of the fully diluted paid-up share capital of
our Company, in a single transaction or multiple transactions combined together over a span of rolling 30 days.
- 2. Price per share of our Company (as adjusted for corporate actions, including split, bonus issuances) based
on secondary sale or acquisition of equity shares or convertible securities (excluding gifts) involving any
of the Promoters, members of the Promoter Group, Selling Shareholders or other shareholders with rights
to nominate directors during the 18 months preceding the date of filing of this Draft Red Herring
Prospectus / the Red Herring Prospectus, where the acquisition or sale is equal to or more than 5% of the
fully diluted paid-up share capital of our Company, in a single transaction or multiple transactions
combined together over a span of rolling 30 days (“Secondary Transactions”)
INDUSTRY OVERVIEW
Unless otherwise indicated, industry and market data used in this section has been derived from the report titled “Industry
assessment – Powertrain Solutions and Alloys & Metallics Components” dated March 2025 (the “CRISIL Report”),
exclusively prepared and issued by CRISIL Intelligence, who were appointed by our Company pursuant to an engagement
letter dated December 20, 2024, and the CRISIL Report has been exclusively commissioned by and paid for by our
Company in connection with the Offer. The CRISIL Report is available on the website of our Company at
https://www.heromotors.com/cpage.aspx?mpgid=30&pgidtrail=34 from the date of this Draft Red Herring Prospectus
until the Bid/Offer Closing Date, and has also been included in “Material Contracts and Documents for Inspection –
Material Documents” on page 619. The data included herein includes excerpts from the CRISIL Report and may have
been re-ordered by us for the purposes of presentation. There are no parts, data or information (which may be relevant
for the proposed Offer), that have been left out or changed in any manner. Unless otherwise indicated, financial,
operational, industry and other related information derived from the CRISIL Report and included herein with respect to
any particular calendar year/ Fiscal refers to such information for the relevant calendar year/ Fiscal. Industry sources
and publications are also prepared based on information as of specific dates and may no longer be current or reflect
current trends. Industry sources and publications may also base their information on estimates, projections, forecasts and
assumptions that may prove to be incorrect. Accordingly, investors must rely on their independent examination of, and
should not place undue reliance on, or base their investment decision solely on this information. The recipient should not
construe any of the contents of the CRISIL Report as advice relating to business, financial, legal, taxation or investment
matters and are advised to consult their own business, financial, legal, taxation, and other advisors concerning the
transaction. For more information, see “Risk Factors - Certain sections of this Draft Red Herring Prospectus disclose
information from the CRISIL Report which is a paid report and commissioned and paid for by us exclusively in connection
with the Offer and any reliance on such information for making an investment decision in the Offer is subject to inherent
risks.” on page 70. Also see, “Certain Conventions, Presentation of Financial– Industry and Market Data”” on page 18.
MACROECONOMIC OVERVIEW OF GLOBAL AND INDIAN ECONOMY
Overview of global economy
Global economic growth remained steady during CY2024 with several large economies showing resilience despite
geopolitical tensions, high interest rates and the growing intensity of extreme weather events. Further tightening of
financial conditions has also challenged the global trade and industrial production in CY2024. Given continued
inflationary pressure, central banks in both advanced emerging markets and developing economies remained cautious in
easing monetary policy. The global outlook remains subdued, both advanced economies and emerging market and
developing economies are set to grow upward marginally in CY2024, reflecting upgrade for Asian countries mainly China
and India. India has witnessed strong growth momentum despite these geopolitical tensions and uncertainties in the global
economic environment. A major push to economic growth has been fuelled by investments and key sectors such as
information technology, services, agriculture, and manufacturing.
Page 188
Passenger car sales boomed globally in 2019, then plummeted during the pandemic (2020-2021). A tentative recovery
began in 2022-2023 as the markets started opening up gradually after the pandemic abated. Between 2019 and 2021, the
global passenger vehicles industry logged a CAGR of (9.7)%. Further, between 2022 and 2024, the industry clocked a
CAGR of 5.4% with volumes reaching up to 31.33 million units. Between 2019 to 2024, the industry logged a CAGR of
(2.7)% on account of a mix of major downturns and gradual upticks.
Review of global PV sales volumes based on transmission type (% wise share)
Note: Above figures comprise sales for US, Europe and ASEAN countries
Source: Mordor Intelligence, CRISIL Intelligence
Automatic transmission has witnessed a significant uptick, escalating from contributing 29% in 2019 to 37% in 2024.
This surge is attributed to worsening traffic conditions, increasing affordability and growing consumer preference for
comfort. Notably, in the premium segment, there is a discernible shift towards smoother driving experiences, fuelling the
demand for automatic transmission, continuously variable transmission (CVT) and dual clutch transmission (DCT)
technologies.
For decades, manual transmission reigned supreme, particularly in markets where fuel efficiency was paramount. Its
simple design and direct connection between the driver and engine offered exceptional control and minimised energy loss.
However, several factors have led to a change in this scenario.
The rise of urbanisation: The constant stop-and-go driving of urban environments is far less suited to the constant clutch
modulation and gear changes required by manual transmission. Automatic transmission with its seamless operation offers
a far more comfortable and less stressful driving experience in these conditions.
The comfort factor: Consumer preferences are tilting towards convenience and a smoother driving experience. The ease
of use and minimal driver intervention offered by automatic transmission is increasingly valued, especially by a growing
demographic of older drivers who may find the physical demands of manual transmission less appealing.
Technological advancements: Automatic transmissions have not remained stagnant. Advancements in technology have
led to significant improvements in their fuel efficiency, making them a more viable option for eco-conscious drivers.
Additionally, the development of new automatic transmission types, such as CVT and DCT, offers a wider range of driving
experiences, catering to both comfort-seeking individuals and performance enthusiasts. CVTs, due to their focus on fuel
efficiency, smooth driving experience, and ease of operation, that aligns well with the needs of many car buyers, have
gained considerable momentum over the years. Its overall share increased from 15% in 2019 to 21% in 2024, marking its
strong existence amongst the other transmission counterparts.
Page 190
boast of larger battery packs that can be charged from an external source, enabling an extended electric-only driving range
as compared to HEVs. These hybrid options cater to consumers who are hesitant to fully commit to BEVs due to range
anxiety but still desire the environmental benefits of electric propulsion. The industry is constantly refining hybrid
technology, focusing on improving electric range and reducing dependence on gasoline engines.
Fuel cell electric vehicles (FCEVs) present a long-term vision for clean transportation. They use hydrogen fuel cells to
generate electricity, emitting only water vapour. While FCEVs boast of extended range and rapid refuelling times similar
to ICE vehicles, their widespread adoption faces significant challenges. The lack of widespread hydrogen refuelling
infrastructure and the high cost of FCEV technology are major hurdles. Nevertheless, the industry continues research and
development efforts to bring down costs and build hydrogen infrastructure, recognising FCEVs' potential for long-distance
travel and heavy-duty applications.
The future of passenger car powertrains is unlikely to be dominated by a single technology. Instead, a multi-pronged
approach catering to diverse needs and regional priorities is expected.
Global passenger car sales by geography type
Review of global PV sales volume share by geography type
31.33
31.44
28.18
35.85
28.66
29.24
Source: Mordor Intelligence, CRISIL Intelligence
The narrative of global passenger car sales from 2019 to 2024 unfolds differently depending on the region. However, a
common thread across all regions is the anticipated surge in EV adoption. Government incentives and growing
environmental concerns are likely to accelerate EV sales, shaping the future of the global passenger car market. While the
pace of this shift might vary by region, EVs are expected to be a dominant force in the years to come.
Outlook of global passenger vehicles industry (2024 to 2029)
Outlook of overall global PV sales volume
Page 193
The global two-wheeler industry underwent major transformation over 2019-2023. A confluence of factors fuelled
tremendous growth, while unforeseen challenges reshaped the landscape. Urbanisation, particularly in developing
economies, created a surge in demand for affordable and efficient transportation. According to the United Nations (UN)
Department of Economics and Social Affairs, nearly 68% of the world’s population will live in urban areas by 2050. Two-
wheelers, with their manoeuvrability and fuel efficiency, have emerged as the perfect solution for navigating congested
city streets. Furthermore, the rise of a strong middle class with increased disposable income fuelled the desire for personal
mobility, propelling two-wheeler sales.
Historic production development (2019-2024)
Review of global two-wheeler sales volume
CAGR: 4.9%
CAGR: (7.3)%
CAGR: (0.2)%
Note: Above figures comprise sales in the US, Europe and ASEAN countries
Source: Mordor Intelligence, CRISIL Intelligence
Over 2019-2024, developing economies, particularly Southeast Asia, led the charge in the two-wheeler market with a
surge in sales fuelled by affordability, a growing middle class and rapid urbanisation.
Globally, consumer preferences shifted to fuel-efficient options such as scooters and smaller motorcycles. User-friendly
automatic scooters also gained popularity, especially in congested cities. The emergence of electric two-wheelers has
offered an exciting eco-friendly alternative with potentially lower running costs. Economic downturns impacted sales
globally, while stricter emission regulations posed challenges for manufacturers, particularly those in developing regions.
Safety concerns remained a major hurdle, especially where traffic infrastructure lagged.
Between 2019 and 2021, the industry witnessed a CAGR of (7.3)% due to the pandemic as demand from all the
geographies were hit. Demand revived at a CAGR of 4.9% between 2022 and 2024, with sales touching 16.41 million
units in 2024. Overall, between 2019 and 2024, the industry witnessed a CAGR of (0.2)%, with volumes in 2024 still not
reaching the pre-pandemic number of 16.56 million units.
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Note: Above figures comprise sales in the US, Europe and ASEAN countries
Source: Mordor Intelligence, CRISIL Intelligence
Gas-powered scooters are facing a fresh challenge from electric upstarts. The industry has played a big role in this battle.
On the ICE side, manufacturers leverage the existing network of gas stations, keeping refuelling convenient for these
scooters. Additionally, established technology allows them to offer a wider variety of affordable models, appealing to
budget-conscious riders.
The electric scooter industry counters with a focus on environmental responsibility, highlighting their clean operation.
They are also working on paring upfront costs to make electric scooters a more attractive option. However, the lack of
widespread charging stations and the higher initial price tag compared with gas-powered models are still hurdles. The
share of electric scooters has significantly increased from approximately 4% in 2019 to approximately 9% in 2024, driven
by ASEAN countries, where scooters are accepted as a family vehicle and e-scooters have been managing to vouch on
that trend with wider acceptance and increasing spending powers in these countries.
Looking ahead, both options will likely share the road. The industry's efforts to improve battery range and expand charging
infrastructure will be key for electric scooters to gain wider acceptance. Additionally, government policies promoting
cleaner transportation could give electric alternatives a significant edge.
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The German motorcycle industry experienced a positive start in 2023, becoming the third largest in Europe. Same trend
has continued in 2024 as well. Germany is renowned for its highly developed automotive sector, housing numerous
distinguished brands like BMW Motorrad, MZ, DKW, Horex, Kalex, that manufacture and distribute vehicles globally.
However, motorcycles constitute only a small portion of Germany's transportation manufacturing industry.
Review of scooters sales volume by displacement type
Source: Mordor Intelligence, CRISIL Intelligence
The European scooter market underwent a dramatic shift from 2019 to 2024, with a surge in demand for electric
alternatives. Traditionally, scooters have thrived in Europe due to their practicality and affordability. Their
manoeuvrability makes them ideal for navigating congested city streets and tight parking spaces.
However, electric scooters are rapidly changing the landscape. A few of the reasons for that are – regulatory landscape in
Europe that focuses on stringent emission regulations, favourable financial support programs like for e.g., subsidies on
purchase price, tax breaks, and even free scooter registration in some regions significantly reduce the barrier to entry for
e-scooter adoption, and they also provide fleet operator support wherein some of the European cities provide financial
backing to e-scooter fleet operators, encouraging them to expand their services and making e-scooters more readily
available.
ASEAN
The ASEAN region is another sizeable contributor to overall global two-wheeler sales. Two-wheelers are the primary
mode of transportation for a sizeable portion of the customer base within the ASEAN region. During 2019-23, two-wheeler
sales in the ASEAN region shrunk at 1.9% CAGR with major contributors witnessing a contraction—Indonesia (1%
CAGR fall), Vietnam (6.2% CAGR drop), Philippines (2.3% CAGR decline). Thailand, on the other hand, clocked a 2%
CAGR growth compared with 2019 levels.
Review of ASEAN two-wheeler sales volumes
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The motorcycles industry in the ASEAN region is heavily driven by motorcycles with smaller engines (<600 cc) withapproximately 98% share in the overall market, which has remained constant for the past six years. EV penetration is
much lower in motorcycles, although it has grown from 0.1% in 2019 to approximately 1% in 2024.
Review of ASEAN scooters’ sales volumes by displacement type
Source: Mordor Intelligence, CRISIL Intelligence
Although overall scooter sales declined at a CAGR of 1.8% from 2019 to 2024, e-scooters clocked a healthy 18.8% CAGR
growth, led by lower operating costs, expanding portfolio and continued government support. Healthy growth in e-scooter
sales supported EV penetration within scooters—from 3% in 2019 to 8% in 2024.
For instance, in Thailand, where two-wheelers are the most popular mode of transportation, electric motorcycles and
scooters are making a significant impact. These electric scooters are relatively inexpensive, costing about 84,000 Thai
Baht or USD 2,500 in Bangkok.
Major global two-wheeler manufacturers
BMW AG
BMW AG, founded in 1916, is a German multinational company that specialises in the manufacturing of luxury
automobiles, motorcycles and engines. BMW AG is involved in producing and marketing cars and motorbikes.
BMW has a global presence with manufacturing plants and sales networks in various countries worldwide. They have
production facilities in Germany, the US, China, South Africa, and other locations. In 2024, BMW reported sales of
210,408 motorcycles worldwide.
Harley-Davidson Inc
Founded in 1903 and based in Milwaukee, Wisconsin, Harley-Davidson is one of the most iconic motorcycle brands
globally. It is renowned for its heavyweight motorcycles tailored for cruising on highways. Harley-Davidson's business is
segmented into three main areas: the Harley-Davidson Motor Company, which includes the design, manufacture, and sale
of cruiser, touring, and other styles of motorcycles; the LiveWire segment, which focuses on electric motorcycles; and the
Harley-Davidson Financial Services, offering financing, insurance, and other services to dealers and customers. It has
manufacturing facilities in the United States, Brazil, India, and Thailand, which allow it to support its global operations.
In 2024, Harley sold 1,51,229 units of motorcycles globally, compared to the sales of 1,62,771 units in 2023.
Ducati Motor Holding SPA
Ducati Motor Holding SPA, founded in 1926, is an Italian motorcycle manufacturer owned by the German automotive
group Audi through its subsidiary Lamborghini. Ducati is renowned for its high-performance motorcycles featuring
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Outlook of motorcycles sales volumes by cc segmentation
Source: Mordor Intelligence, CRISIL Intelligence
Motorcycles lesser than 600 cc are anticipated to clock a CAGR of 1% to 3% between 2024 and 2029 whereas higher cc
motorcycles (greater than 600 cc) are anticipated to clock a growth of 2% to 4% between the same period.
Outlook of EV penetration in the global two-wheelers industry (2024 to 2029)
Environmentally conscious consumers and burgeoning urban populations are demanding cleaner, more manoeuvrable
transportation options, thus making way for electric two-wheelers in the market. Governments are responding with
subsidies and infrastructure investments, while on the financing front, fintech companies are creating financing solutions
such as low-interest loans and battery leasing to make electric two-wheelers more accessible.
Outlook of overall EV penetration in the global motorcycles industry
Source: Mordor Intelligence, CRISIL Intelligence
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EV penetration in motorcycles shall globally witness an upward trajectory from 1.4% in 2024 to 7% to 9% in 2029. With
scooters taking the charge in terms of electrification, EV penetration in motorcycles will move at a slower pace. Increasing
affordability and focusing on providing more options shall remain the key pointers for major OEMs to drive the
motorcycles industry.
Outlook of overall EV penetration in global scooters industry
Source: Mordor Intelligence, CRISIL Intelligence
EV penetration in the scooters industry globally shall witness a significant increase from 9.2% in 2024 to 21% to 24% in
2029. Technological advancements and government support shall remain the key growth drivers for this segment.
However, macroeconomic trends in major geoagraphies will bear watching for this industry to flourish in coming years.
By geography type
United States
Outlook of two-wheeler sales volumes in the US by vehicle type
CAGR: 3-5%
Source: Mordor Intelligence, CRISIL Intelligence
Two-wheeler volumes in the US are anticipated to clock a CAGR of 3% to 5% between 2024 and 2029, reaching 0.45
million to 0.85 million units in 2029 from 15.60 million units in 2024. Factors such as congestion in major cities,
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popularity of adventure touring and evolution of electric alternatives shall remain the key drivers for the two-wheeler
industry in the US.
Outlook of motorcycles sales volumes in the US by displacement type
CAGR: 3-5%
Source: Mordor Intelligence, CRISIL Intelligence
Electric motorcyles, though lower in volumes, are expected to clock a CAGR of 43% to 47% between 2024 and 2029,
followed by growth in the premium motorcycles segment (>600 cc), which logged a CAGR of 1% to 4% during the period.
Motorcycles with smaller engines (<600 cc) shall remain stagnant in terms of volumes for the next five years with sales
hovering at 0.2 million to 0.5 million units.
Outlook of scooter sales volumes in the US by displacement type
Source: Mordor Intelligence, CRISIL Intelligence
