Though states have started gradual unlocking of markets, two wheelers are yet to see the kind of surge in demand witnessed by cars and SUVs. Bajaj Auto is expecting demand in India to be flat for the year, but exports are expected to hit an all-time high.
During FY21, Bajaj Auto, the third-largest two-wheeler brand in India, sold more vehicles outside India for the first time. Its exports of 2.05 million units (two-wheelers and three-wheelers) were higher than the 1.91 million units sold within India in FY21.
“The overall situation remains quite ambiguous for the industry. Its prospects are very closely inter-twined with the progression of the pandemic and the advancement of the vaccination programme and its consequent impact, directly and indirectly, on our business. However, based on our current information and visibility, we expect the year to be flat or to grow in low single digit over the previous year,” Rakesh Sharma, executive director, Bajaj Auto, said at the annual general meeting of the company.
Slow demand leads to inventory pile-up
Demand for two-wheelers within India has not picked up as generously as expected, leading to a slightly higher inventory level at dealerships. As per the apex dealer association, the Federation of Automobile Dealers Association (FADA), inventory, at the end of June, stood at 25 days while retail volumes grew by just under 17 percent. The Street was expecting June volumes to rise on expected pent-up demand.
Speaking to Moneycontrol, Soumen Ray, chief financial officer, Bajaj Auto, said: “Demand has not come back as fast as we would have believed, but these are early days. Let us look at it by the end of July. But yes, demand is not looking as strong as last year.”
During the April-June quarter, Bajaj Auto launched the CT 110X and the Pulsar 125NS motorcycles in the domestic market. The company claims to have lined up a series of launches for the year, which would start from September.
“We have an exciting pipeline of products, including upgrades as well as new platforms. Both our launches in Q1 have been received very well. Come September, we should see the start of exciting new introductions, both in the commuter and the sports segments, which will shift the industry standards and offer new propositions to customers,” Sharma added.
To enter four new export markets
The current year will also see Bajaj entering four new export markets, including the Brazilian market, which is one of the top five markets for motorcycles in the world. With a targeted 200,000 units a month, the Pune-based company is expected to close FY22 with more than 2.4 million in exports.
“Internationally, we have been exporting over 200,000 vehicles every month to 79 countries, out of which 30 are very important markets for us. And they span across Latin America, Africa, Asia, Middle East and ASEAN countries. We expect to continue with the two-lakh plus exports every month,” Sharma added.