Neutral light comes on when the wire makes a ground connection inside the motor.

This can also happen if the wire's insulation rubs through ...



Wire comes out of the engine in a big half round rubber grommet between clutch side cover and main case located next to the clutch rod area.

Trace it and find the end where it connects to the wiring harness.

Unplug it and test continuity to the crankcase, should only show continuity when bike is in neutral.


You will also likely find the frayed spot where the short is while you are tracing the wire.

If there is no frayed spot and it still shows continuity all the time you will have to take the clutch side cover off to investigate further.

Good luck !!!