Honda accelerates incentives to confront Hero, but EVs still lag behind

Overview of the dispute between Honda HMSI and Hero

In the final moments of FY26, HMSI launched an incentive program for dealerships with the goal of boosting volumes and increasing market share against the leader Hero MotoCorp.

However, the move comes as HMSI's scooter sales are growing below the market average, and the EV effort faces significant challenges.

Recent results: Hero still leads, Honda follows closely

In February 2026, Hero MotoCorp dispatched 516,968 units, with annual growth of 44.7% and a market share of 27.62%. HMSI lagged behind with 513,217 units, a 33.7% YoY increase and a market share of 27.42% (down from 27.73% the previous year).

In the first 11 months of FY26, Hero led with 5.5 million units against Honda's 5.2 million, maintaining a share of approximately 26.92% for Hero and 25.36% for HMSI as of February 2026. The incentive program is one of several implemented in the last five months, showing Honda's offensive to close the gap by the end of the fiscal year.

Challenges in the EV era

The scooter market in India, including electric ones, advanced by 17.7% in the first 11 months of FY26. HMSI, however, saw its scooter sales grow by only 7.7%, to 2.8 million units.

Honda's electric models, Activa and QC1, had production halted around August 2025, due to issues such as low sales performance, limited range, and a restricted battery swapping network for the Activa and QC1. Meanwhile, rivals TVS Motor and Bajaj Auto are accelerating their EV share. TVS leads electric two-wheelers in CY2025 and FY2026, with the iQube above 300,000 units. The electric Bajaj Chetak is also recovering, reaching peak sales in October 2025. Some view Honda's focus on gasoline motorcycles as a strategy against the rising cost of fuel.

Market and Valuations

The two-wheeler economy in India tends to favor higher-value models, with a decline in smaller motorcycles and growing demand for larger scooters. Scooter penetration is between 36% and 38.4% Year-to-Date FY26.

Valuations: Hero MotoCorp trades at ~18.2-19.39 times P/E, with a cap of about ₹1.06 trillion. Honda Motor Co. has a P/E between 5.34 and 10.94, with a cap of about US$ 31.83 billion. TVS Motor and Bajaj Auto show high P/E ratios: TVS between 53.43 and 84.03 (market capitalization ~₹1.65-1.84 trillion) and Bajaj Auto between 25.1 and 28.47 (cap ~₹2.53-2.74 trillion). TVS's EV leadership suggests high growth expectations; Honda's P/E reflects risks or lower growth in the electric segment.

Risks of EV Lag

Boosting volume with combustion scooters may bring quick gains, but it carries risks if the transition to EV accelerates. Honda's electric production was halted due to issues like impractical battery swapping and limited range compared to rivals like TVS iQube and Bajaj Chetak, signaling an obstacle to keeping up with future market needs.

Path Forward

The dispute between Hero MotoCorp and HMSI remains fierce at the end of FY26, with the possibility that incentives will generate market share gains, provided the electric portfolio evolves and Honda adapts to consumer changes in India.

What do you think? Will the end-of-fiscal incentives consolidate Honda's advantage, or will the bet on gasoline motorcycles slow down the transition to EV? Share in the comments.