Hero MotoCorp Reports 20% Growth in Two-Wheeler Sales Following GST Rate Cut, ETCFO
The government’s decision to rationalise GST rates on two-wheelers delivered an immediate and meaningful boost to demand, triggering a sharp turnaround for an industry struggling to gain momentum earlier this year, said Vivek Anand, Chief Financial Officer (CFO) of Hero MotoCorp in an exclusive interview with ETCFO.
“The simple answer is yes,” Anand said, when asked whether the GST rate cut had revived demand. “The GST rate rationalisation was a welcome step. The government’s intent to improve affordability and drive consumption was very clear,” Anand explained.
GST cut triggers sharp turnaround in two-wheeler demand
Effective September 22, the GST rate on two-wheelers up to 350 cc was reduced from 28% to 18%. Hero MotoCorp passed on the entire benefit to customers, leading to an immediate demand response, Anand said, adding that the impact has been visible at an industry level.
Anand pointed out that the two-wheeler market, which had grown at less than 2% in the first half of the year, has now decisively shifted into double-digit territory. “October and November combined growth for the industry is about 20%. An industry growing sub-2% has suddenly moved to nearly ten times that rate,” he said.
While festive demand did contribute to the surge, Anand stressed that the underlying momentum remains strong even after adjusting for seasonality. “Even if you take out the festive impact, growth is still in high double digits,” he said, estimating a sustainable demand uptick of around 10–12%.
Growth broad-based across segments and geographies
The strongest gains were seen in price-sensitive segments, particularly entry-level motorcycles and scooters. “Segments like 100 cc and 125 cc motorcycles and scooters saw the biggest lift,” Anand noted, adding that two-wheelers continue to play a vital role as income enablers and economic multipliers, especially in semi-urban and rural markets.
Importantly, the recovery has not been narrow or uneven. Anand said demand growth has been broad-based, cutting across product categories and geographies. “We are seeing growth across entry as well as premium segments, and across all sales regions. It is not limited to one part of the country,” he said.
Drawing parallels with past policy interventions, Anand stated that tax reductions in the auto sector have historically delivered durable demand revival. “Over the last 20 years, we’ve seen multiple excise duty cuts. Each time, a price reduction of around 4–6% led to high double-digit growth that sustained for at least two years. What we are seeing now looks very similar,” he noted.
Looking ahead, Anand said the momentum created by the GST cut is likely to persist over the short to medium term. “October and November clearly indicate double-digit growth with healthy quality. This is not a short-lived spike,” he added.
