GST Effect On Bikes: Honda Two-Wheelers To Cut Prices

Prices of Honda two-wheelers are expected to drop by 3 to 5 per cent once the GST structure is implemented from 1 July 2017. Other two-wheeler companies including Bajaj, TVS, Royal Enfield and UM are also expected to announce similar price cuts once the new tax structure comes into effect.

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Highlights

  • HMSI is expected to slash prices of its two-wheeler range by 3-5%
  • Bajaj Auto and Royal Enfield have already announced benefits
  • The affect of GST on prices of premium two-wheelers is still unclear

Honda Motorcycle and Scooter India (HMSI) is expected to slash prices of its two-wheeler range between 3 to 5 per cent, after a uniform Goods and Service Tax (GST) is implemented from 1 July 2017. The government is expected to roll out GST by the same date and Bajaj Auto and Royal Enfield have already announced benefits to be passed on to consumers in the form of price cuts. Other two-wheeler companies are also expected to follow suit, and most companies are reportedly still trying to work out the exact impact of the new tax structure.

"The price cut will differ from state to state and product to product. We expect it to range between 3 to 5 per cent on an average. Whatever benefit there is, we will pass on to the consumer, " said Y S Guleria, Senior Vice President, Sales and Marketing, Honda Motorcycle and Scooter India.

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Bajaj is offering discounts on its complete range

Bajaj Auto is offering discounts of up to ₹ 4,500 on its entire range of motorcycles. Of course, the actual discount price depends on the model and the state where the bike is purchased as well. Royal Enfield has also started offering discount benefit on on-road prices starting from 17 June 2017.

In addition, TVS Motor Company too has announced price cuts across its model range. KN Radhakrishnan, President & CEO, TVS said, "We are very optimistic about GST which is a landmark reform . It will bring in a lot of ease in doing business. We will be passing on the benefits to our customers." Lastly, US-based UM Motorcycles has also decided to pass on the GST benefits to customers, ahead of the 1st July deadline.

What is still not clear is how prices of premium two-wheelers will be affected. Under the new GST rules, prices of bikes with engines more than 350 cc will attract an additional 3 per cent cess, over and above the 28 per cent flat duty under GST. This may see prices of premium bikes in some states go up, and in others go down, depending on current state tax rates.

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It is still not clear how prices will be affected on premium motorcycles

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So, the flat 28 per cent GST plus 3 per cent additional cess will affect prices of KTM bikes like the 390 Duke and RC 390, and Royal Enfield models with engine capacity of 500 cc and 535 cc. But technically, Royal Enfield's 350 cc models shouldn't fall under this bracket since the engines of these bikes, including RE's largest selling model - the Royal Enfield Classic 350 - have an actual displacement of 346 cc, just under the 350 cc limit. Other premium bikes which are assembled in India, like Triumph, Ducati and Kawasaki will attract the additional cess, but so far, it's still not clear how it will finally affect on-road prices of these bikes.

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