Bajaj Auto May total sales fall 4% to 3.39 lakh units

Moneycontrol Bureau

India's second largest two-wheeler maker Bajaj Auto's total sales in May declined 4 percent year-on-year to 3.39 lakh units, sending its shares down over 3 percent

Its total motorcycle sales slipped 5 percent from a year ago to 3.05 lakh units. The company said, domestic motorcycle sales were up 3 percent 2.12 lakh units, helped by the launch of new Discover 100T and 125ST.

However, total exports fell 14 percent last month to 1.12 lakh units.

Also Read: Auto stocks slip 1-3 percent as sales remain sluggish in May

Bajaj Auto's motorcycle sales in the domestic market have been helped by wedding season demand, but with that nearing an end, Rajiv Bajaj, MD, expects retail sales in June to be lower than that in May.

On the other hand, exports are expected to move back into the positive trajectory, he told CNBC-TV18.

As of April 30, the company's market share was at 24 percent.

Its total three-wheeler commercial vehicle sales, meanwhile, were up 14 percent to 34,568 units.

Bajaj Auto's total sales over April-May are down 7 percent to 6.84 lakh units.

Bajaj's local rival TVS Motor had on Saturday said its total sales in May fell 6 percent to 1.65 lakh units.

At 10:10hrs, Bajaj Auto shares were down 3.5 percent at Rs 1,756.95 on NSE. TVS Motor was up 0.6 percent to Rs 36.10. 

Below is the edited transcript of Bajaj’s interview to CNBC-TV18.

Q: Just walk us through your numbers in terms of what sales have been like and how they have broken up between your key categories?

A: On the whole, it has been like it has been for the past few months- flat. Total sales year-on-year were about 340,000 versus 350,000 so it was down four percent, almost relatively flat.

Three wheelers have generally been doing better. Three wheeler sales year-on-year was up about 14 percent from 30,000 to nearly 35,000. So, we continue to see good growth. I am hopeful that with the launch of new three wheelers, starting this month, the sales should improve.

On motorcycles, the year-on-year number is down. However, if we split it into domestic and exports, we see a differential. For a change, domestic sales are positive. We are up three percent year-on-year. We are also up in April-May sales compared to April-May sales previous year and I attribute this largely to the success of the new Discover that was launched in the last few months.

_PAGEBREAK_

Export markets in motorcycle sales are down compared to last year due to the instability we faced in various markets. But for now, fortunately, the instability in the market is behind us so it does take a couple of months for dealer orders to recover and then for the shipments to improve correspondingly. I think that is the phase we are in. Hopefully exports will also become neutral or move into positive territory in the next month or two.

Q: You have pointed to the fact that you are expecting a weak June, purely on motorcycle sales how much of a slippage do you think you guys may have to deal with?

A: It is hard to forecast. In the month of May for Bajaj Auto, while our billing to dealers were about three percent higher year-on-year, the retail was higher by over 10 percent and I suspect this would be the case for most makers as everybody would have shared some profit because retail sales have been very good due to the marriage season in the north. What we are going to see in June is a reversal of that. Definitely, retail in June will be lower than May. One cannot say by how much but hopefully since everybody shed some inventory in May, one can continue to hold on to billing numbers as being equal to retail. So, I don’t see much reason for concern on primary sales but definitely secondary sales in June will be lower.

Q: Which are the export markets that are still under pressure and how many more months before you see recovery there?

A: Primarily, these are the markets of Africa. In Nigeria, where up until January we had reached an average monthly motorcycle sales level of close to 40,000 a month. Last month, in the month of May our retail sales in Nigeria are only 30,000 because in several towns or constituencies, the motorcycle has been banned from being used as a taxi. Now the flip side has been that correspondingly three wheeler sales in Nigeria have moved up from about 3,000 a month on an average to last month to be precise a figure of 4,800. So, from a point of view of three wheelers sales and profitability, that is actually little better but unfortunately it has impacted the motorcycle unit sales.

However, these are actions that happened in markets like Nigeria over a period of time and market have stabilised now. I think dealers will place bigger orders and it will be a month or two before our sales to dealers will stabilize.

Q: Just a two part question – First, what is the exact dealer inventory level that you guys are seeing right now and second, on the export front what could be a sustainable run rating in your mind?

A: Based on May motorcycle retail figures, the domestic inventory would be about 4.5 weeks worth. But since June retail would be lower than May, I would say it would be closer to 5 weeks. It varies between 4 to 5 weeks depending on the month in question. I would say that is nearly normal figure – 4 weeks is typically normal.

As far as exports are concerned, the three wheeler exports are pretty normal at about 23,000 to 25,000 units a month. It is the motorcycles sales that have slipped to about 90,000 which should be over a 100,000. I would say in July, if not in June itself we should see that happen.

Q: Where is market share right now and how does it split up between you guys and Hero MotoCorp and Honda?

A: Up until April, as far as domestic motorcycle is concerned, to the best of my collection, we have still around 24 percent. I think Honda Motorcycle and Scooter India (HMSI) will be at 16 percent or 15 percent and Hero would still be a leader at 50 percent. The May numbers for competition are not known to me so I can’t comment.