Hero MotoCorp and Bajaj Auto which are among bestsellers in Indian biking industry, their head authorities have a different point of view on the GST rates being levied on two-wheelers.
Pawan Munjal, Chairman and Managing Director of Hero Motocorp demands reduction in the GST rate of two-wheelers and shifted from luxury goods bracket of 28% to mass usage items at 18% slabs. Further, he added that the two-wheelers are basic mobility for the masses in the country and a GST rate cut would be a sigh of relief for two-wheeler customers as well as the entire biking fraternity. Also, it will support in expanding the auto sector to create and sustain the essential inclusive economic growth.
2018 has been a tough year for the automotive market owing to the increased two-wheelers insurance cost and liquidity crunch in the industry. And the country’s largest selling automaker witnessed a dip of 4 per cent on year-on-year sales basis in December sales with 453,958 sold units. The automaker which was earning a double-digit sale from several years experienced such a fall in sales.
In a contrary, Rajiv Bajaj, Managing Director of Bajaj Auto, has a completely different opinion as per him a GST rate cut would help in boosting two-wheeler sales. however, it would not be the only solution. As per him, the automakers should have to focus on developing more products rather than sops.
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Bajaj’s head honcho justified his take by saying that the sports motorcycle segment which is led by the Pulsar brand is growing at a rate of 25 per cent and the products in the segment are 50 per cent dearer over the mid commuters in the market.
The statements clearly showcasing a positive sales recorded by Bajaj in December 2018. In year-to-year sales, the Pune based bikemaker registered a whopping growth of 39 with 157,252 dispatched units. Much lower as compared to Hero MotoCorp’s sold units.
However, Bajaj said, if a GST rate cut happens it will be an antidote to increased costs for technological enhancement in two-wheelers in order to comply with the new norms. The country is going to witness the implementation of new safety norms from April 2019 and the emission norms switching to BS-VI from BS-IV on April 1, 2020. As per him, it is not the correct time and if it happens hurriedly it will only be detrimental to sales.