While headwinds in the international market have hit exports , Bajaj Auto anticipates that export demand will return soon. Bajaj Auto Executive Director Rakesh Sharma spoke to businessline about demand in the domestic motorcycle industry, the development of electric two-wheelers, exports, and partnerships in the electric vehicle segment.

 

Q

Demand in the entry-level motorcycle segment is stagnant. Is this largely due to l mute rural sentiment? 

Demand in the motorcycle industry is a story of two halves, the 100 cc motorcycle segment, which accounts for almost 50 per cent of the demand, and the other, 125 cc and above segments. Demand in the top half is in double-digits, while in the bottom half it is either negative or stagnant.

Over the last three years, costs on account of regulatory, insurance, and government regulations have gone up by almost 40 per cent for entry level consumers. This has contributed to the slowing down of demand at this level. A large chunk of 100 ccs are sold in both the rural and urban areas. I would say that the phenomenon has less to do with geography and more with income class.

Q

How is the demand for Bajaj premium bikes? Do you foresee a dip in two-wheeler demand due to the increase in vehicle cost after the change in regulations?

The 125 cc segments, 200 cc segments have seen much higher growth for almost 18 months. The 125 ccs segment, which was 44 per cent of the industry, accounts for 50 per cent of the industry today and is growing fast.

The cost that comes with the new regulations is not very significant. I don’t expect that to hurt demand, which is on a recovery path. A marginal increase in OBD-related cost will not hurt demand, particularly in the top half of the segment. It may have a very marginal impact in the bottom half of the motorcycle industry.

Q

Are raw material prices still volatile?

Prices have stabilised now from our perspective. The last two-three years saw a cost escalation.  

Q

Bajaj Auto is setting up a dedicated electric vehicle manufacturing plant. Are you looking at exporting the electric Chetak?

We are studying international markets and at some point intend to export the electric Chetak. But India offers a lot of opportunity and is a priority market. Given our global footprint, discussions are ongoing, and we will introduce electric vehicles in the international market once we gain confidence on the supply front. This will be once the Indian agenda is well under control. 

Q

When can we expect an electric bike from Bajaj Auto?

It is under development and we are working on it. It is still some time away. 

Q

Bajaj Auto has a successful partnership with KTM. Are you looking at a similar partnership in the EV space?

That kind of partnership is not easy to come by, and a lot of factors have to fall in place for that sort of partnership. There has to be a congruence of business interests. Going forward, if such a partnership is available in the EV space, we would certainly look at it. But our approach is to focus on a very high level of strategic alignment, because things then become smoother and faster operationally. We will be selective, but we are open to a partnership that will strengthen us in the EV space also. 

Q

What is the present export situation?

Exports are going through a difficult period. A couple of things, including the valuation of certain emerging market currencies, have led to inflation in the economy, which has dampened demand for higher priced motorcycles and three-wheelers.

Second is the availability of US dollars. Central banks have taken a cautious stand towards conserving foreign exchange and are using it for necessary products such as drugs and pharmaceuticals, and food. Availability of US dollars for general trade is meagre, which is impacting the trade.

We hope that in the next few months, equilibrium is achieved in all of this and the central banks become more relaxed about dollar availability. It could take 2 months or 4 months; it is difficult to predict and we hope it resolves itself.

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