Hero MotoCorp Shares Dip 2% Amid ABS Mandate Concerns

Mumbai, June 23, 2025: Shares of Hero MotoCorp declined in morning trade on Monday after the Ministry of Road Transport and Highways announced a new regulation mandating anti-lock braking systems (ABS) for all new two-wheelers, including entry-level scooters and motorcycles.

The regulatory move is expected to increase vehicle prices by about 3-5%(₹3,000 per unit), potentially dampening demand across the price-sensitive segments of the market. Coupled with China’s tightening of rare-earth magnet exports, it is likely further to choke the already fragile recovery in the two-wheeler market, stalling whatever slow growth was beginning to take shape.

As a result, Hero MotoCorp’s stock experienced a sharp dip. At 12:17 p.m., the shares were trading at ₹4,269.00, down 1.6% from the previous close, paring some losses after the initial dip.

Hero’s Market Exposure Raises Vulnerability

Due to the price hike induced by the mandatory ABS inclusion, the demand for two-wheelers could fall by 2–4%. Hero MotoCorp, which commands a dominant position in the sub-125cc category, is likely to feel the brunt of the impact.

In FY25, this segment comprised nearly 85% of total industry volumes, with approximately 1.69 crore units. Hero MotoCorp generated 99% of its domestic sales from this bracket. It gives the company significant exposure to price-sensitive customers.

Industry-Wide Concerns Amplified

Previous regulations, such as BS-6 emission norms and higher insurance premiums, have impacted demand, especially in rural and budget-oriented segments. Analysts expect a similar or even a sharper slowdown this time, with 100cc bikes, scooters, mopeds, and even most EVs likely to see slower offtake due to cost escalations.

Compounding the challenge, the industry is already facing supply-side headwinds. The ongoing tightening of rare-earth magnet exports by China threatens EV production timelines for players like Hero MotoCorp, TVS Motor, and Bajaj Auto.

Seasonal Uptick May Be Short-Lived

The new regulation comes at a time when the two-wheeler market was beginning to show signs of recovery, driven by the wedding season and rural demand buoyed by policy support and macroeconomic stability. However, the sudden cost pressure might cut short the momentum heading into FY26.

Market Outlook

The government’s mandate for ABS on all new two-wheelers is expected to raise prices, hurting affordability in a highly price-sensitive market. Hero MotoCorp shares dipped as investors priced in concerns over demand erosion in the entry-level segment. The market will closely watch post-regulation sales data and festive demand to gauge the long-term impact on volumes and margins.

With 99% of its domestic volumes in the under-125cc category, Hero MotoCorp’s cost-sensitive customer base makes it particularly vulnerable to regulatory-induced price hikes. Industry watchers will be closely monitoring post-mandate sales data for signs of softening demand.

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