Bike is not only the most favourite vehicle of the common man, but is also a big source of income for companies. So let us know how much companies will earn by selling a bike after the new GST rates are implemented?

There is a tremendous craze for bikes among the youth. The demand for bikes increases even more as the festive season approaches. During this time, companies make huge profits. But do you know how much money a company earns by selling a bike?

Bike business worth billions in India

The two-wheeler market in India is growing rapidly. Bike manufacturing companies do a business of billions of rupees by selling millions of bikes every year. But do you know how much profit a company actually earns by selling a bike and how will the recent change in GST rates affect their earnings? Let's find out.

India's two-wheeler market is at the forefront in the world

Let us tell you that the automobile sector accounts for 6 to 7.1 percent of India's GDP. While this sector contributes 49 percent to manufacturing. In such a situation, the sale of vehicles is giving strength to the economic activities of the country. India's two-wheeler market is the largest in the world. According to the data of Society of Indian Automobile Manufacturers (SIAM), 19.6 million bikes were sold in FY 2024-25, which is 9.1% more than last year. Companies like Hero MotoCorp, Bajaj Auto, TVS and Honda are the backbone of this market.

How much profit do companies make?

According to SIAM, companies make a profit of 3 to 9 percent on vehicles sold in showrooms, while the government has reduced GST on two-wheelers with less than 350 cc capacity from 28 percent to 18 percent. The bike market in India is mainly based on models with less than 350 cc capacity, which account for about 98 percent of the total sales. For example, bikes like Hero's Splendor or Bajaj's Pulsar have an average ex-showroom price of Rs 80,000 to Rs 1.5 lakh. But the company's earnings are not determined only by the selling price, but also by the production cost, input tax credit (ITC) and margin.

Profit or loss after GST reduction?

On the one hand, sales will increase due to low GST. Experts estimate that two-wheeler sales can jump by 15-20 percent during the festive season. Companies like Hero and Bajaj, which sell more than 80 percent of commuter bikes, will see an increase in total profit due to increased volume. Lower GST will have less impact on production cost, because now 18% GST will be levied on auto parts as well. This will make the supply chain cheaper and increase ITC's profit. As a result, profit per bike can increase by Rs 1,000-2,000. However, big bike companies like Royal Enfield may suffer losses as 40% GST on their 350cc+ models will increase the price by 6-7%, which may reduce sales.