Bajaj Auto, KTM and Triumph to Develop Sub-350 cc Bikes to Counter GST Hike

Bajaj Auto is working with its premium partners, KTM and Triumph, to develop a new line-up of sub-350 cc motorcycles to offset the steeper GST slab on higher-capacity bikes. The move follows a strong second quarter for the company's Pro-Biking division and comes as India's tax structure reshapes the economics of the mid-size motorcycle market.

During the company's Q2 FY26 analyst call, Rakesh Sharma, Executive Director, said the change in the GST regime had placed some of the company's most popular products at a disadvantage.

"The GST rate cuts found some of the KTM and all of the Triumph models on the wrong side of the 350 cc divide. However, we maintained prices, absorbing the GST increase, and to some extent, the customers rewarded us with their support during the festival," Sharma told analysts.

Even with the tax headwinds, Bajaj's Pro-Biking business—comprising KTM and Triumph—delivered its best-ever quarter, selling over 30,000 units, a 30 percent year-on-year increase.

GST Reshapes the Playing Field

The new GST framework, which took effect on 22 September 2025, has significant implications for pricing and product planning. Two-wheelers up to 350 cc now attract 18 percent GST, down from 28 percent, while bikes above 350 cc fall into a sharply higher 40 percent slab—a full nine-point increase that hits mid-size premium motorcycles the hardest.

For brands like KTM and Triumph, whose core offerings hover around 390 cc and 400 cc, the change has created a clear incentive to engineer smaller-capacity engines to qualify for the lower tax band. Bajaj Auto's decision to absorb the short-term impact on its current line-up while developing future sub-350 cc platforms is a direct response to this shift.

Engineering for the Lower Band

Sharma confirmed that Bajaj and its partners are already acting on this plan.

"We are also working along with our partners, KTM and Triumph, on reshaping our portfolio to take advantage of the lower GST rates, and these products will be launched in due course," he said.

The co-development programme will result in new motorcycles positioned below 350 cc, combining global brand attributes with pricing advantages under the 18 percent GST regime. The effort allows Bajaj Auto to maintain aspirational performance levels while improving affordability.

By holding ex-showroom prices steady through the festive period, Bajaj maintained momentum for the KTM 390 series and the Triumph 400 range, demonstrating resilience even as cost pressures rose.

Industry observers expect these forthcoming bikes to target the 300–350 cc range, now a fast-growing sweet spot dominated by Royal Enfield's Classic 350 and Honda's CB350 series.

Resilience Through Transition

The company's broader Q2 FY26 performance underscored this adaptability. Bajaj Auto posted revenue nearing ₹15,000 crore, EBITDA above ₹3,000 crore with a 20.5 percent margin, and PAT of around ₹2,500 crore—all record highs.

"To some extent, the customers rewarded us with their support during the festival," Sharma reiterated, noting that substantial brand equity and customer confidence helped sustain demand despite the GST shock.