We export largely to the global South; but trade war can hurt in various ways: Rajiv Bajaj

"EVs would account for about 10% of Bajaj Auto's total output," Rajiv says, "but our scooters, Chetak, are 100% EV, and if a ban comes, all Chetak dealers have to close down".

Likewise, nearly 20% of Bajaj's 3-wheelers, where it is a global leader, are electric.

But the rare earths export restriction by China is an extreme scenario, it's a threat in the future and for the whole world, he says.

For Bajaj Auto itself, at the moment, the trade war is bringing other minor irritants like costlier steel due to the anti-dumping duty and threats of sudden closure of the markets where Rajiv says the company has a profitable business of exporting Triumph motorcycles.

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What about domestic growth?

"The two-wheeler industry is barely back to pre-COVID levels; it is not necessarily in the best place yet”, says Rajiv, referring to the recent slowdown in urban consumption. "But there are always positive surprises," he says.

“We are surprised by the two-wheeler industry’s growth in Uttar Pradesh in the last 12 months...We hear of wonderful roads in UP, improved security situation, more women riding 2-wheelers," says the Bajaj CEO.

Rajiv refuses to commit to a growth number for this year or for his next five-year term as MD, which has just begun.

"Our growth will be the sum of all our global markets."

"It is also dependent on policy: if state governments see the advantages of electric two-wheelers and force conversion from ICE to EV, Bajaj will be a beneficiary," he argues.

Though Rajiv was wary of predicting his company's short-term growth, his big, bold assertion was that Bajaj as a company has shown the ability to adapt, to be versatile.

Rajiv Bajaj cut his teeth in the industry in the early nineties when Bajaj scooters was the undisputed leader that was seeing its absolute dominance being snatched away by Hero Honda as the consumers clearly indicated their preference for motorcycles over scooters. It was then that the young Rajiv argued with his iconic father, Rahul Bajaj, and moved him and the company, screaming and kicking, into the motorcycle market.

KV Kamath, referring to those times, narrated to me that Rahul Bajaj once said, "With a twinkle in his eye, told me, my son has bested me".

“Bajaj has been through two and a half transitions," explains Rajiv with some nostalgia.

First was the transition from scooters to motorcycles. And it wasn't just scooters.

“1960s scooters to 21st century's motorcycles is the first big transition of Bajaj...Bajaj’s second big shift is going international from being a domestic company. When I joined, we were entirely domestic; now we are in exactly 100 countries. And now we are in the middle of the third transition from ICE to EVs”, Rajiv says.

Rajiv has just been granted by his shareholders a new 5-year term as MD & CEO, and his goal in these five years is to continue what he began.

“My job has been to enable Bajaj to be the most versatile motorcycle maker in the world. We never said we would be the biggest or the most profitable motorcycle company... we said we will be the most versatile."

So, when asked about the challenge from EV start-ups like Ola and Ather or trade wars, his quiet assertion is “Bajaj will adapt.”

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Will Bajaj go for premiumisation?

Rajiv dismissed that word as cliched.

"I prefer to say differentiation. Bajaj is in 100 markets, and each is different in its size, income levels, and preferences," he explains. “Focus and fragmentation are two sides of the same coin,” he said his strategy is to pick segments and markets and be the best there. "Focus and fragmentation are two sides of the same coin", he notes.

Lately, the Indian two-wheeler market has been seeing TVS gain market share, and both Hero and Bajaj losing market share. So, what's TVS getting right?

Rajiv argues that TVS is nowhere in large segments like the 125 cc motorcycle or even the 400 cc Triumph category. He obliquely hinted that Bajaj doesn't want to be in some lower-margin scooter segments.

So, is Bajaj fixated on 20% margins?

No, says Rajiv, they don't start with margin targets.

"Margins are always a consequence" of the segments a company chooses to be. “If Maruti were only a small car maker, its EBITDA would be higher."

“Bajaj is actually a 21% or 22% EBITDA company... 1-2% is set aside for experimentation; that way there is always a start-up within the legacy company," he says, adding with a twinkle, "Mark Twain said don't let schooling interfere with your education; we say don't let business interfere with your entrepreneurship!"

Rajiv attributes the success of India's two-wheeler industry to the sheer good fortune of being born in the world's largest 2-wheeler market and secondly, to the sensible regulations that successive Indian governments have come up with.

“Indian emission regulation is on par with the best in the world," he says, so Bajaj bikes are competitive and profitable in Europe. Likewise, India's safety regulations, “A 13-horsepower motorcycle needs the anti-lock braking system in India, but not in Europe...Indian two-wheeler safety regulations are actually ahead of Europe”, he says.

Rajiv was emphatic about his company's success in the 3-wheeler space.

"Bajaj is a world leader in three-wheelers, he said, adding they are "witnessing enormous traction for Bajaj’s electric three-wheeler. In a couple of months, we are entering the e-rick segment".

He hinted, but wouldn't reveal much about a trump card currently up his sleeve.

“Bajaj is working on a very interesting partnership opportunity; it's a global opportunity with a very interesting company & a brand that is adjacent to our core space," was all he would reveal.

"If we do something smart stuff, we can grow faster than the market," he said.