Hero MotoCorp shares fall 2% as mandatory ABS rule seen hurting demand, pushing up prices

Hero MotoCorp shares have been on a strong run, having risen 21 percent in the last three months.

Shares of Hero MotoCorp slipped 2 percent to Rs 4,263 in morning trade on Monday on June 23, after the transport ministry made anti-lock braking systems (ABS) mandatory for all new scooters and motorcycles.

International brokerage Nomura expects two-wheeler demand to take a hit of 2–4 percent as the government moves to make Anti-lock Braking Systems (ABS) mandatory across all domestic models, including entry-level variants.

The regulation is likely to push up prices by around Rs 3,000 per unit, translating to a 3–5 percent increase in vehicle costs. Hero MotoCorp, with its strong presence in the budget segment, is likely to be the most impacted.

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In FY25, the sub-125cc segment dominated India’s two-wheeler market, accounting for nearly 85 percent of total industry volumes, or about 1.69 crore. This included around 92.6 lakh ICE motorcycle sales and approximately 71 lakh scooter sales — the latter making up nearly all domestic scooter volumes in this category. Hero MotoCorp led the pack with 99 percent of its domestic sales coming from this segment, followed by Honda (89 percent), TVS Motor (86 percent), and Bajaj Auto (72 percent).

"In the past as well, when prices rose due to regulations such as insurance and BS-6, industry demand was impacted. This time around, we believe the impact is likely to be higher for entry segments such as 100cc bikes, scooters and mopeds. Most EVs will also need to bear this cost," Nomura's report added.

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The development comes just as the two-wheeler industry was gearing up for a strong rebound in FY26, with demand picking up sharply during the ongoing wedding season—particularly in rural markets, where gifting two-wheelers remains a popular tradition. Analysts expect rural demand to outpace urban consumption through 2025, supported by government incentives, tax breaks in the Union Budget, and a stable macroeconomic environment.

The two-wheeler industry is also grappling with supply constraints as China has tightened the supply of rare-earth magnets, crucial components for two-wheeler electric vehicles. Bajaj Auto, TVS Motor and Hero MotoCorp are likely to face production risks in the next couple of months if the situation remains the same.

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At about 9:40 am, shares of the company were trading at Rs 4,268, lower by 1.6 percent from the last close on the NSE. Hero MotoCorp shares have been on a strong run,  having risen 21 percent in the last three months.

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