Shares of automobile companies like Bajaj Auto, Mahindra & Mahindra, TVS Motor Company, and Hero MotoCorp are trading lower on Monday. The decline follows the Ministry of Road Transport and Highways’ proposal to make Anti-lock Braking System (ABS) mandatory for all new two-wheelers sold in India.Starting January 1, 2026, the government plans to enforce ABS installation across all scooters and motorcycles, irrespective of engine capacity.
Global brokerage firm Nomura expects this regulation to reduce two-wheeler demand by 2-4%. According to its estimates, the mandatory ABS requirement will increase vehicle costs by approximately ₹3,000 to ₹2,000 for the ABS unit and an additional ₹1,000 for a disc brake if the model does not already include one. These costs are likely to be passed on to consumers, potentially raising retail prices by 3–5%.
Nomura also warns that domestic two-wheeler volumes could fall by up to 4% if the rule is implemented.
It mentions that past regulatory-driven price increases, such as those for insurance and BS-VI emission norms, have also negatively impacted demand. This time, the entry-level segment, including 100cc bikes, scooters, and mopeds, is expected to face the most pressure. Most electric two-wheelers will also be affected, except premium models like Ola S1 Pro and S1X Plus.Among the listed original equipment manufacturers (OEMs) tracked by Nomura, the revenue exposure to vehicles under 125cc is significant: Hero MotoCorp (79%), TVS Motor Company (54%), and Bajaj Auto (24%).
Global brokerage firm Nomura expects this regulation to reduce two-wheeler demand by 2-4%. According to its estimates, the mandatory ABS requirement will increase vehicle costs by approximately ₹3,000 to ₹2,000 for the ABS unit and an additional ₹1,000 for a disc brake if the model does not already include one. These costs are likely to be passed on to consumers, potentially raising retail prices by 3–5%.
Nomura also warns that domestic two-wheeler volumes could fall by up to 4% if the rule is implemented.
It mentions that past regulatory-driven price increases, such as those for insurance and BS-VI emission norms, have also negatively impacted demand. This time, the entry-level segment, including 100cc bikes, scooters, and mopeds, is expected to face the most pressure. Most electric two-wheelers will also be affected, except premium models like Ola S1 Pro and S1X Plus.Among the listed original equipment manufacturers (OEMs) tracked by Nomura, the revenue exposure to vehicles under 125cc is significant: Hero MotoCorp (79%), TVS Motor Company (54%), and Bajaj Auto (24%).
On the positive side, the regulation could benefit component manufacturers that produce ABS and disc braking systems. Bosch and Continental are major suppliers of ABS, while Endurance Technologies dominates the disc brake market with a 60% share in front disc systems and 42% overall. Other players include Brembo and Nissin.
As of the financial year 2024-25, two-wheelers with engine capacities below 125cc make up nearly 85% of the domestic market.
The ministry is expected to release an official notification soon. The aim of the new regulation is to enhance road safety by reducing accidents. ABS helps prevent wheel lock-up during sudden braking, improving stability and vehicle control.
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