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Union Budget's income tax cut up to Rs 12 lakh to rev up two-wheeler demand, says Hero MotoCorp

If consumer sentiment improves in response to higher disposable incomes, the broader two-wheeler market could see a faster recovery.

February 07, 2025 / 13:01 IST
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Hero MotoCorp shares have slipped nearly 14 percent in the last three months.

Hero MotoCorp sees a potential boost for the two-wheeler industry following the government’s recent budget, which slashed income tax to zero for those earning up to Rs 12 lakh per annum. The move is expected to leave more cash in the hands of middle-income consumers, particularly those in the Rs 6 lakh–Rs 12 lakh bracket—a key demographic for entry-level and commuter motorcycles.

Within this segment, the 100 cc category plays a crucial role, catering to buyers looking for affordable and fuel-efficient mobility. With lower tax outflows, disposable incomes are set to rise, easing the financial burden of purchasing a two-wheeler. Hero MotoCorp estimates that individuals earning between Rs 10 lakh and Rs 12 lakh annually could see an additional Rs 40,000–Rs 50,000 in their pockets. "This should really drive consumption," Hero MotoCorp Management said in a conference call on February 7, a day after declaring its Q3 earnings.

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This extra liquidity could make vehicle ownership more accessible, as the savings roughly align with a year’s worth of EMI payments for a two-wheeler. With affordability concerns addressed to some extent, the industry could see an uptick in demand, particularly in the entry-level segment.