Bajaj Auto expects early recovery in bike sales, three-wheelers to take longer

MUMBAI: Bajaj Auto Ltd is witnessing faster-than-expected recovery in motorcycle sales, but the company said it would take longer for three-wheeler demand to bounce back to pre-covid levels.

Demand for motorcycles rose up to 85% YoY in July with sales reviving across urban pockets and not only in rural and semi-urban markets, said Rakesh Sharma, executive director of Bajaj Auto, India’s largest exporter of motorcycles and three-wheelers.

“While select urban pockets like large metro cities are underperforming currently, overall retails have come back strongly. We have seen a strong retail offtake of 90-95% during the first 10 days of July,” Sharma said, adding that the company is looking to build inventory, which is less than 30 days currently.

The senior company executive said that the three-wheeler segment has been impacted more than motorcycle and it would take longer for the vehicle category to recover to pre-covid-19 levels.

“The pandemic has impacted road traffic, the ride hailing business, there are no commuters on the road, children are not going to the schools, office goers are working from home, all this has impacted the demand for three-wheelers,” Sharma said.

He added that the three-wheeler owners are seeing only 30-40% of their daily earnings now, which would have a cascading impact on the financiers of these vehicles (autorickshaws) as there would be EMI payment issues.

About 95% and 85% of Bajaj Auto’s two-wheeler and commercial vehicle dealerships respectively are currently operational, the company updated.

On the export front, the company has a strong order book for KTM led premium motorcycle range, Sharma told Mint.

“The demand for KTM bikes has bounced back strongly in Europe during the April-June quarter. This also is the peak sales season. A bigger share of KTM production is being exported today and because of that our domestic channels are under-fed,” he said.

Bajaj Auto has recently launched its premium motorcycle range in Thailand, where it had also set up a new 100% subsidiary last fiscal. Earlier in May, Mint reported that Bajaj Auto plans to enter Thailand in July and had also appointed a distributor who would set up the local retail network.

The company’s June quarter results saw its standalone revenue from operations decline 60% to ₹3,079 crore on the back of covid-19-led disruptions in the domestic and export markets. It’s profits fell 53% YoY to ₹528 crore.

The earnings before interest, taxes, depreciation and amortization or Ebidta margins for the June quarter are at 14.3%, contracting from 16.1% from the year-ago period. To be sure, Bajaj Auto’s overall margins stood at 17.6% for the last fiscal.

While Q1FY21 was marred by uneven production schedules due to plant shutdown during April, the company said that a large part of May was also lost as several regional markets remained under lockdown to contain the spread of coronavirus.

The month of June, however, witnessed a sharp recovery sequentially on the back of robust farm produce and pent up demand coming from the rural and semi-urban markets.

Bajaj Auto’s total vehicle sales during the first quarter stood at 443,103 units, down 64% from 1,247,174 units sold in the domestic and export markets during the year-ago period.

The company said Wednesday that Pulsar led its domestic sales through the June quarter with more than 69,000 units sold in the 150cc segment and over 32,000 units sold in the 125cc executive commuter category. The affordable models such as CT100 and Platina variants fetched sales of over 32,000 units and 45,000 units respectively during the period.