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auto | IST

Bajaj Auto says mid-market segment to lead growth in festive season; chip shortage still a worry

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Bajaj Auto just posted their September sales data. The total sales dropped 9 percent to 4,02,021 vehicles in the month under consideration, as compared to 4,41,306 units in September 2020. To discuss the company’s September performance as well as the ongoing chip shortage issue, CNBC-TV18 spoke to Rakesh Sharma, ED, Bajaj Auto.

Bajaj Auto just posted their September sales data. The total sales dropped 9 percent to 4,02,021 vehicles in the month under consideration, as compared to 4,41,306 units in September 2020. The company's two-wheeler sales in the domestic market in September this year stood at 1,73,945 units, as against 2,19,500 two-wheelers sold in the same month of 2020.
To discuss the company’s September performance as well as the ongoing chip shortage issue, CNBC-TV18 spoke to Rakesh Sharma, ED, Bajaj Auto.
On chip shortage, he said, “Chip shortage doesn't affect us as much as the four-wheelers, but it affects us on the high-end bikes and those customers around the world are disappointed, and we have a very good position in the higher-end segment, sports segment, both in India and overseas through Bajaj brand and KTM brand. There, we are only able to meet about 65 percent or so of the requirements. But in the overall scheme of things, if you take 4 million, this 35 percent shortfall in the sports segment is not huge, but it is disappointing that we can't fulfil the customer expectations.”
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On exports, Sharma said, “The export side is doing extremely well. The marginal growth rate this year, this month is because of the base effect. But we are very comfortably despite container and chip shortages. We should be doing much better than that in October. Latin America, Africa, most of South Asia, barring Sri Lanka are all returning very well in the post-COVID scenario. ASEAN is returning places like Philippines etc., but still a little bit muted compared to other regions of the world. Given our competitive position in the market, we are appropriating more than the market recovery, so that is holding steady and I think we should be continually clocking over two lakh.”
On electric vehicles, he said, “We are not in the wait and watch mode, I don't think there is anything to test waters. It is quite evident that the transition from ICE to electric is a firm and substantive trend. The slope of the changes is all that needs to be determined, we cannot anticipate that because it is driven by primarily how the costs come down and how the customer gets reassured regarding charging but be that as it may, this migration from ICE to electric is here to stay. It is an opportunity for us because it opens up this scooter segment in India and all over the world and we are very excited about it.”
Sharma added, “However, having said that, in this phase, our preoccupation is with building capability. It is not about because this is a new business, we are looking at being driven primarily by that objective in the immediate term, we are not driven by a volumetric objective alone.”
On festive season, he said,” Our view of the retail outlook in the festive period is positive, we are optimistic about it. There are many indicators, how the rural demand is coming back in, how retail finance is behaving, how the inquiries are shaping up, the excitement at the dealership level is suggesting that there should be a single-digit to low-double digit growth during the festive season.”
“I think the decks are lining up for a reasonable festive period. In that, we think that it is the middle part of the industry which is going to grow. The price increases led by various regulatory and cost increases in the high performance, sport segment, etc., is a bit muted. Similarly, the low-end of the market where I think the economy is more distressed than the middle, that part of the consumer demand is also muted. So I think we will see the middle part all across India, we are seeing a spectacular recovery in some parts of Maharashtra and South is just sort of coming back on stream,” he further mentioned.
On EV penetration, Sharma said, “Currently, electric penetration is less than 2 percent of the two-wheeler industry and this is going to grow, but it is not going to get explored in one big shift. These are transitions which will occur over a period of time. At Bajaj Auto, we are taking a view of continuing our leadership position, are wanting to be successful in the business of mobility. We are in the business of two-wheeler, three-wheeler mobility, we want to retain this leadership and we feel that this transition has started, it will play out over a period of time and we have to get in position for that. It is too early right now to start to evaluate competitive positions, competitive advantages, just on the sheer numbers because that is not what we are chasing right now.”
(With inputs from PTI)
For full management commentary, watch the video.