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auto | IST

Bajaj Auto: See demand decline in mass market segment, says Rakesh Sharma

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Demand in the mass market segment of the auto industry is witnessing a decline, said Rakesh Sharma, Executive Director, Bajaj Auto. Bajaj Auto may see a double-digit decline in volumes in Q4 FY22, he added.

The mass market segment of the auto industry is seeing a decline in the demand, said Rakesh Sharma, Executive Director, Bajaj Auto on Monday, while adding that the revival in the economy is yet to trickle down to the two-wheeler segment.
"Two-wheelers sales service a particular segment of the economy, which is the more vulnerable and the weaker segment. And if you take this as a surrogate measure of the performance of the economy over a period of almost 24 months, it is very clear that this segment has been hit and the revival in the economy has not yet trickled down to it. Therefore, we are not seeing demand picking up," he said.
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Sharma also added that Bajaj Auto may see a double-digit decline in volumes in the fourth quarter (Q4) of the current financial year ending on March 31, 2022 and no bottom is in sight at the moment. Similar volumes were seen during the months of October, November and December, he added.
"We are going to be looking at some of the different cuts segment wise and retail, in rural and urban etc. But at an overall level, this quarter — across October, November, December — has been very similar and the industry is still facing a double digit decline. I think the retails in the industry are declining by 15 to 17 percent, which is a very significant decline. I'm hoping that when the new numbers, the detailed numbers come in, it should look like we are bottoming out but I don't think that we are bottoming out, we will probably continue to see this double digit decline in Q4 as well."
Despite this, Bajaj Auto has gained 3 percent market share in the last three quarters, he pointed out.
"Certainly I would say we have gained market share and the market share, which I like to refer to is the one which is the registration data, which comes from VAHAN. And over the last three quarters, we have actually gained 3 percentage points. So we are sitting at about 20 percent market share, estimated in the motorcycle segment."
Speaking on electric vehicles (EVs), he said Bajaj Auto will roll its first EV in the month of June this year from the company's manufacturing unit at Akurdi. Bajaj Auto is gearing up for expansion in the EV space with an optimistic view, he said.
"We are gearing up with an optimistic view of the transition from an ICE to electric vehicles (EVs) and this Rs 300 crore investment should give us a half a million capacity and it's happening right here in Akurdi. But we will be rolling out product from here as early as probably June if not earlier June of 2022 and progressively build it up to be about half a million."
On the global concern surrounding supply chain disruption, Sharma said there is uncertainty in the supply chain for EV-specific components too. However, he added that the growth drivers are in place.
"The key constraint is the supply chain in terms of very EV specific components. Fundamentally, the drivers are intact, the drivers are strong, but there is this overlay of the economics, the purchasing power, the money in the pocket of people and in this period, if you see retail finance, is doing much better than cash sales, which is also an indicator of people not having enough cash in their pockets," he said.
Watch the video for full interview.