Hero MotoCorp has requested the government to consider a phase-wise reduction of GST. The two-wheeler brand suggested that the government reduced the GST on two-wheelers in the initial stage and later bring the lower rates to four-wheelers. The GST Council is scheduled to meet on 20 September in Goa.
Speaking to Press Trust of India (PTI), Niranjan Gupta, CFO, Hero MotoCorp, said:
I understand that potential adverse impact on government revenue is becoming a constraint (for GST rate cut). While increased sales should take care of that, even if we assume a shortfall in revenue, a resolution can be found if we approach this topic in phases… This will contain the potential revenue loss, and also cover around 20 million buyers.
The company suggests that the Government can look at reducing the GST rate on two-wheelers under the 150 cc displacement to 18% (from the present 28%). Bringing the GST rate to 18% for the sub-150 cc category will provide relief to 16 million potential customers. Gupta added:
They are drivers of economy, especially in the heart of the nation, in tier II, III cities and villages. They not only provide mobility to millions, but also make them employable and support small businesses. Thus, it is unfair to club them under the same category as four-wheelers or expensive motorcycles.
Regular readers would know that the automobile industry is suffering from lacklustre sales due to the steep price increase over the past one year, which is a result of revised insurance rates and the mandatory installation of CBS/ABS safety tech to all two-wheelers. A lower GST rate will offer some solace against the price increase. The reduced GST rate will also help insulate the BS-VI impact that is likely to be a 10% to 15% price hike.
The Splendor range took a massive hit in its sales performance in July this year. Hero MotoCorp registered a 50% fall in year-on-year sales for this commuter bike, reporting 1,30,333 unit sales in July 2019 as against 2,60,865 units in the corresponding month last year.
In other updates, Hero MotoCorp has announced special offers and discounts on its complete scooter range to boost the sales during the festive season. Under the ‘Hero Scooters Grand Carnival’ offer, buyers will get benefits such as low down payment and low-interest rates. The offer also includes two-times GoodLife benefits and Paytm benefits of up to INR 8,500.