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High single digit negative growth seen during Navratri: Bajaj Auto

auto | Oct 21, 2021 6:22 PM IST

High single-digit negative growth seen during Navratri: Bajaj Auto

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According to the Federation of Automobile Dealers, two-wheeler sales were down 17 percent on a year-on-year basis during Navaratri. High fuel prices are also impacting buyer sentiment. Bajaj Auto is the largest exporter of motorcycles. CNBC-TV18’s Parikshit Luthra spoke to Rakesh Sharma, Executive Director of Bajaj Auto.

According to the Federation of Automobile Dealers, two-wheeler sales were down 17 percent on a year-on-year basis during Navratri. High fuel prices are also impacting buyer sentiment. Bajaj Auto is the largest exporter of motorcycles.

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Rakesh Sharma, Executive Director at Bajaj Auto, said, “We track motorcycles, and we are still, let us say, one-third into the season; so this might be a little bit premature. But, if one compares the first day of the 35-36-day festival period, with like-for-like of those 10 days last year, then yes, I will say that we are negative, we are about high single-digit negative over last year. So, it is a slow start. But having said that, there are various things which have, sort of got delayed, whether it is the bonus by the government agencies, etc. which is sort of unfolding as we speak. So, one is hopeful that the balance half of the 36-day season should see a smart recovery.”
Like other automobile manufacturers, Bajaj Auto has also been dealing with chip, and container shortages. Sharma said, “That continues and that uncertainty is really a big cloud around us. Now, our usage of chip is in the high-end bikes, and high-end bikes I would say, in an overall sense, forms a third of our production, and half of that sort of gets impaired -- both domestic and export for Bajaj and KTM. So, volumetrically it may be small, but the impact is slightly bigger when it comes to profitability. But most importantly there are competitive positions all across. There is our partner KTM who relies on us for these kinds of products, that gets sort of affected. But this is something which is now affecting almost everyone and customers have also also started to digest this information.”
Bajaj Auto reported an 11 percent decline in two-wheeler sales in September. However, the company has seen a significant increase in EV sales, from 600 units sold in the first six months of last fiscal to 2,729 units in H1 of FY22.
On two-wheeler sales, he said, “We are trying to examine, in this very complex environment, the behaviour of demand in the 10-day period, compared to last year. There are a lot of myths surrounding this, but it is negative. I think, the target customer for an entry-level bike is very different from entry-level cars. Now, we all know that in the last 18 months or so, people at the lower end of the pyramid (the lower half of the demand pyramid) -- their purchasing power got hit much more than those in the top quartile, which is where car demand resides, and that is what we have been seeing for many months. So, it is not just a phenomenon of these 10 days, but for many months one has been seeing that there's been a postponement of purchases by entry-level commuter bike buyers, even though people are now alert to the fact that there is a big petrol price increase, and therefore, they have to move towards fuel efficient motorcycles, etc. In spite of that, we cannot deny the fact that the purchasing power of that segment of consumers has been hit.”
“There is a reassurance because of the vaccination program. Life is coming back to normal, but still money in the pockets of those customers is tentative. They are saying that okay, can we postpone discretionary purchases as they have to spend on clothes? This festival season, at the entry-level, people are asking since they have to spend on food, sweets, and new clothes, etc, which is a discretionary expenditure they can push to a later date? Unfortunately, two-wheelers fall in that quadrant.”
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