AHMEDABAD: Automobile dealers’ body, Federation of Automobile Dealers Association (FADA), recently made a representation to the GST Council demanding that GST on two-wheelers be reduced to 18%. At present, 28% GST is levied on two-wheelers. This is almed at making two-wheelers more affordable. reviving demand and reinvigorating an industry that has seen a significant slump in sales over the past few years, according to FADA
According to FADA Gujarat, even as automobile sales bounced back after a slump during Covid-19, two-wheeler sales failed to recover Two-wheeler sales declined 20% from 13.3 lakh in 2018 to 10.7 lakh in 2022
The two-wheeler industry has not recovered to its peak levels since 2018. Even as the industry began stabilizing, the two-wheeler sector is at a critical juncture grappling with unprecedented challenges including inflation, emission norms and a slow uptick in demand due to weak rural sales and work from home culture and reduced discretionary spending, sald Pranav Shah, past chairman, FADA Gujarat
Shah explained that per dealer sales have gone down by at least 30% and dealerships are struggling to do business viably. According to the automobile retailers body, rising prices of two-wheelers have impacted its affordability and in turn demand.
“Popular two-wheelers, including gearless vehicles as well as motorcycles, have become costlier by up to 80% from 2016 to 2023. The continuous rise in two- wheeler prices has consequently led to a decline in sales, emphasizing the pressing need for intervention and GST rate reduction to restore the industry’s growth trajectory. In 2016, two-wheelers accounted for 78% of the total automobile sales in India. However, due to continuous price increases since 2020, this contribution has fallen to 72% in FY23, underlining the impact of the steep price hike,” said FADA in a statement.
Lowering the GST rate will enhance the competitiveness of two-wheelers compared to other transportation modes, thereby increasing sales and revenue for the industry.
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