The demand in the auto sector is back to last year levels which is not a good sign, said Rajiv Bajaj, Managing Director, Bajaj Auto on Thursday. Bajaj also sees a sharp fall in demand after November although he expects December 2020 sales to be slightly higher on year-on-year basis.
Speaking with CNBC-TV18, Bajaj also talked about the new manufacturing facility at Chakan.
“We have signed up for a second plant in Chakan, this was in the works for some time and we are about to now start implementing the facility. This is the first and foremost for expansion in premium motorcycles KTM Husqvarna and the introduction of Triumph. We may possibly also expand electric vehicle portfolio there,” he said.
On the Chakan plant’s capacity and investment, he said, “We would be building this plant for a total capacity of a million units to start with. We have estimated an investment of about Rs 650 crore and perhaps the employment of little over 2,000 people over there.”
On demand, he said, “Things have panned out as I thought they would which is that there has been a demand peak as is the case every year around the festive time. Everybody knows that demand has fallen off very sharply after that, retails post mid-November and into December.”
What the company has recorded in October and November has been good because of the festive season, he said. “In December last year, the company did total of 335,000 units roughly between domestic and exports. I think we will be a little ahead of that this December,” he mentioned.
According to him, on the domestic front the company will be on par with last year with motorcycles.
“We have almost doubled the EBITDA of the domestic motorcycle portfolio, which has been a very significant positive for us,” he said.
Bajaj Auto has 90 percent market share in the three-wheeler market primarily in major metros, he said.
In terms of exports, Bajaj mentioned, “The reason our overall numbers will be in-line with or a bit better than last year is because exports has been going like gangbusters. Demand has been good there.”
On the product front, he said, “We have a huge task before us for the next 24 months which is A] to renew our entire motorcycle portfolio especially on the premium brands, B] there is a humongous amount of work to do on the EV front.”
“On the market front we have to continue to push to improve domestic share and having consistently now been at over 200,000 units exported every month our next goal has to be to move from 2 million exports to 3 million exports on an annual basis. For that we need to successfully and effectively enter the Brazilian market,” Bajaj said.
“On the partnership front, our goal with KTM Husqvarna is to almost double the business in the near future,” he said.
In terms of production-linked incentive (PLI) he said, “It seems that it would be very beneficial to a company like Bajaj Auto and it could be that while with the Merchandise Exports from India Scheme (MEIS) we had a benefit of 2 percent on exports.”
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