In a customer-centric response to the recent GST rate hike on premium motorcycles, Hero MotoCorp and Bajaj Auto have decided to absorb the increased costs on their bikes above 350cc, ensuring no price rise for models like the Harley-Davidson X440, Triumph 400 series, and KTM 390 lineup. This strategic absorption, announced on September 29, 2025, comes amid the GST Council’s revised slab structure effective September 22, which raised the tax on two-wheelers over 350cc from 28% to 40% (including cess). By keeping ex-showroom prices unchanged, the companies aim to protect festive season sales and fend off competition from rivals like Royal Enfield, whose larger models now face hikes of up to ₹22,000.
For bike enthusiasts planning festive purchases, dealers navigating inventory, and investors tracking the $10 billion two-wheeler market, this move underscores manufacturers’ commitment to affordability in a segment growing at 12% CAGR. While sub-350cc bikes benefit from a GST cut to 18% (making them cheaper by ₹8,000-₹15,000), premium models were at risk of 10-12% hikes. Hero and Bajaj’s decision could save buyers thousands, but it’s a temporary buffer—let’s explore the details, affected models, and market implications.
The GST Hike: A Tale of Two Segments
The GST Council’s September 2025 reforms—effective September 22—slashed the rate on two-wheelers under 350cc from 28% to 18%, covering 97-98% of India’s motorcycle market and spurring demand for entry-level commuters like the Bajaj Pulsar and Hero Splendor. However, bikes above 350cc now attract a “sin tax” of 40% (28% GST + 12% cess), up from 31%, targeting “luxury” models and potentially deterring buyers in a subdued demand environment.
Segment-wise impact:
| Segment | Old GST Rate | New GST Rate | Price Change Example | Affected Brands/Models |
|---|---|---|---|---|
| Under 350cc | 28% | 18% | Cheaper by ₹8K-₹15K | Hero Splendor, Bajaj Pulsar 125-220, TVS Apache 160, Honda Activa, Royal Enfield Classic 350 (savings up to ₹22K on TVS Jupiter 125) |
| Above 350cc | 31% (28% + 3% cess) | 40% (28% + 12% cess) | Hike of ₹18K-₹34K (absorbed by Hero/Bajaj) | Bajaj Dominar 400, KTM 390 series, Triumph 400, Harley-Davidson X440, Royal Enfield Hunter 450 (up to ₹22K hike for others) |
The 350cc threshold—covering 97% of sales—has made most bikes cheaper, but premium models risk losing market share without absorption.
Hero and Bajaj’s Strategy: Absorbing Costs for Festive Edge
Hero MotoCorp and Bajaj Auto, commanding 60%+ market share, have opted to absorb the 9% effective hike (from 31% to 40%) on premium bikes to sustain demand during Navratri-Diwali. Hero is maintaining pre-GST prices for the Harley-Davidson X440, while Bajaj is keeping the Triumph 400 series and KTM 390 lineup unchanged, ensuring “riders can continue enjoying” without extra costs.
Hero’s rationale: “The 350cc+ segment is showing a decline post-GST as expected… We’re absorbing to attract buyers amid subdued demand.” Bajaj echoed: “By absorbing the incremental impact, KTM ensures its racing DNA remains accessible this festive season.” This could cost them ₹100-200 crore in margins but boost volumes by 10-15% during the season.
Affected Hero/Bajaj models (prices unchanged):
- Hero: Harley-Davidson X440 (₹2.40 lakh ex-showroom).
- Bajaj: KTM 390 Duke/Adventure/RC (₹2.99-3.50 lakh); Triumph Speed 400/Trident 660 (₹1.99-2.50 lakh).
Rivals like Royal Enfield (Hunter 450 up ₹22K) and Aprilia (RS 457 unchanged) highlight the competitive split.
Market Implications: Boost for Sub-350cc, Pressure on Premium
The GST changes favor mass-market bikes, potentially driving 5-10% sales uplift for under-350cc models during festive months (20% of annual sales). Premium segment growth may slow to 8% from 12%, but Hero/Bajaj’s absorption could mitigate, preserving 15% market share.
Broader effects:
- Consumers: Sub-350cc savings (e.g., Bajaj Platina 110 down ₹5,551 to ₹66,007) spur first-time buys; premium stability aids enthusiasts.
- Industry: 97% market under 350cc benefits; EV scooters (5% GST) gain edge over ICE (18%).
- Economy: Boosts two-wheeler sales (₹1.5 lakh crore market) amid 7.8% Q1 FY26 GDP.
Challenges: Premium hikes for non-absorbing brands could shift demand to used bikes.
Conclusion: Hero, Bajaj’s GST Absorption – A Festive Lifeline for Premium Buyers
Hero MotoCorp and Bajaj Auto’s decision to absorb the GST hike on premium bikes is a savvy play to safeguard festive demand, keeping models like X440 and KTM 390 priced steady amid 40% tax slabs. While sub-350cc bikes get cheaper (up to ₹22K savings), this move ensures premium accessibility, potentially lifting volumes 10-15%. In a market favoring affordability, it’s a win for buyers and brands alike. ET
