Bajaj Auto Limited, which introduced nine products during the previous fiscal year, is now targeting robust sales volumes in the current year. The Pune-headquartered company, which posted an impressive 35 percent rise in net profit in the March quarter, is betting on the world's first CNG-fuelled bike. Rakesh Sharma, ED, Bajaj Auto, told Moneycontrol in an exclusive interaction that the company is targeting fuel-economy-conscious customers with the CNG bike.
Edited excerpts follow:
You mentioned the robust growth in electric 3-wheelers (E3Ws) being one of the key growth drivers. Are you planning to have any joint venture in the electric auto space in future?
We launched our E3Ws in July and started to scale them up from October onwards, and they are now being retailed in about 60 cities. They have been very well accepted and I must also say that in the markets where we have spent six months, we have managed to reach 50 percent share despite the incumbents being there for a while . We are going to be pushing hard on e-autos and, of course, e-cargo, scaling up to 120 cities in the next few months. However, we are not anticipating any JVs in this space.
Do you expect your FY25 performance to be similar to FY24?
For this fiscal year, we expect the domestic (two-wheeler) industry to grow at 7 to 8 percent per annum, with the upper half of the demand pyramid growing significantly faster. Overall, consumer optimism is improving, reflected in loan tenures and financing penetration. In the overseas markets, some key markets like Nigeria, Bangladesh, Argentina and Kenya continue to be very fragile. We have taken a very cautious forward view of these, while in most others the recovery has commenced and we expect to grow. Then there are some new markets like Brazil and parts of Europe, which will add to the performance. Hence, overall, based on this, we expect FY25 to be better than the FY24 performance in exports.
Many carmakers have gone on record by saying that they are phasing out conventional ICE engines. How is Bajaj Auto navigating the transition ?
We do not have the scale to make definitive projections of the medium term. We believe that while EV two-wheelers will continue to grow and take a bigger slice, particularly from scooters, ICE vehicles will also continue into 2030, and we will see not only EVs and ICE co-existing but also the appearance of other alternative fuel options like CNG and ethanol blends for two-wheelers.
What is the capex that you have outlined for this fiscal year? Will it be higher than FY24?
We have not earmarked our capex specifically for new plants as they have already been established. For this fiscal, we will be completing the capex on our electric three-wheeler capacity and possibly some expansion that we need to do on the Chetak brand (of e-scooters). Perhaps, there will be debottlenecking of some existing capacity.
Would the upcoming Pulsar motorcycle be a 400cc bike? Who are your target customers for this model?
We cannot talk about the technical specifications and price points as the product will be rolled out soon, in early May. What I can definitely confirm is that it will be the biggest Pulsar to date and it will attract a new set of buyers. The new Pulsar will be quite different from the Triumph modern classics and will be more of a powerful, high-performance street bike designed to make riding thrilling. What I can also foresee is that there will be a significant set of Pulsar 125-250cc owners who are looking to upgrade to a higher-powered Pulsar.
How is your CNG-powered motorcycle shaping up?
We aim to target the mileage-conscious commuter by launching the world's first CNG bike, which will halve the commuting expenses of that buyer. Besides fuel economy, the bike will have a standout style, best-in-class comfort and a dual fuel capability with both CNG and petrol fuel options on the same vehicle. This is a strong proposition, and we expect it should be very well received. We are not differentiating the markets basis a rural and urban divide. Ultimately, the CNG bike will be made available in all those areas that are served by CNG pumps and it should engage with mileage-sensitive customers foremost.
How do you see the E2W market playing out in the current fiscal year with the phasing out of the FAME2 subsidies?
We think EV two-wheelers will continue to grow, albeit at lower rates than previously, despite a reduction of subsidy, primarily because the electric option is now firmly in the customers' mindset. They will grow primarily by cannibalizing ICE scooters as there is least range anxiety in that segment due to lower daily runs.
With the mass market Chetak EV coming up, are you confident of enhancing your marketshare?
The launch of a new Chetak in the first quarter will ensure that our sales continue to grow every quarter, though April may see a dip in the industry due to advancements (in purchases) made in March. Robust supply chain and R&D work has ensured that we don't need to swim at the deep end of the Red Ocean and the drag of a growing two-wheeler EV business on corporate margins has been significantly mitigated. I can certainly confirm that we are bringing in a new electric scooter under the Chetak brand in May. And it will be the most affordable electric scooter in our range.
How do you see commodity prices moving in the current fiscal and will they impact margins?
While steel's (prices are) holding out, aluminium and copper have moved up. We need to wait and watch and see how some of the other inputs respond to what has been happening in the last couple of weeks. We've anticipated that for the quarter, and we've taken slight pricing from the start of this quarter as well to cushion that impact across parts of the business. The hike in commodity prices is very marginal, but these are very early days to say how the rest of the year might play out.
Export markets have remained muted during the last fiscal year due to various factors. When can one expect a revival here?
Macroeconomic and geopolitical issues continue to be a challenge. Though the number of markets severely affected has been reducing, we have divided the overseas markets into three sets: stressed, recovering and emerging. First are the stressed ones, such as Nigeria, Bangladesh, Kenya, Egypt and Argentina. Second are the recovering markets, which are mostly the balanced markets. Third come the new markets, a clutch of new territories and new segments in existing markets where we are going to enter or have recently entered for our FY25 planning. We have taken a very cautious view of the stress markets, an aggressive approach in the recovering markets, and a strong launch in the new markets and segments.
While it is difficult to precisely estimate the prospects of the stressed markets, most countries in the recovering category are doing better, particularly the LatAm and Asian markets. This powered the performance in the second half and quarter four (Q4 of FY24). Coming to new markets, our new plant in Brazil will start production by June, allowing us to cater to untapped demand and rapidly scale up the network in that country. In this quarter we will expand our presence in Europe.
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