Bajaj Auto eyes price hikes in April as semiconductor shortage hits March sales

Rakesh Sharma, Executive Director, Bajaj Auto, on Monday, said that the sales decline seen in March was entirely owing to a shortfall of semiconductors. Due to the ongoing shortage, he highlighted that the company saw a shortfall to the tune of 30-40 percent in sales.

"The decline which we have faced in March is almost entirely because of shortfalls on the semiconductor front and this has hit us by about 30-40 percent and has become quite acute in March," Sharma said.

Bajaj Auto reported a 20 percent decline in total vehicle sales at 2,97,188 units in March on a year-on-year (YoY) basis. The company had sold a total of 3,69,448 vehicles, including commercial vehicles, in March 2021.

For the full fiscal 2021-22, Bajaj Auto registered a growth of 8 percent in its vehicle sales at 43,08,433 units. In the year-ago period, the company's sales stood at 39,72,914 units. Its total domestic sales during the previous month fell 36 percent YoY to 1,26,752 units, meanwhile exports came in flat at 1,70,436 vehicles.

On price hikes, Sharma mentioned that the company is planning to increase rates in April.

"There has been no price increase in March. As far as pricing in April goes, let the cost numbers get firmed up and then very quickly, these announcements will be made but for sure, we are looking at some kind of a price increase in April," he said.

When asked about demand, he pointed out that the demand scenario is still soft in motorcycles. Sharma said, "The overall demand scenario at the retail level in motorcycles in India is still soft, because there is a double-digit decline in quarter four in March, around 13 percent as per the Vahan data."

Speaking about market share, Sharma  explained that Bajaj Auto has over 70 percent in the three-wheeler segment.

"The three-wheeler business has turned in a very good performance in March and in quarter four with the industry retails coming back, with the traffic coming on the roads and the market share climbing up to almost 70 percent in three-wheelers, we are very well poised in this relatively better profitability segment to reap the benefits of the industry coming back," he mentioned.

Sharma expects full production to be back by Mid-June, early July.

On electric vehicles (EVs), he highlighted that the segment has received a good response so far, and that the manufacturing capacity for EV two-wheelers is not an issue for the company.

"It is already running on the roads. It has received an outstanding reception. There is a very, very long waiting list for it. We have held back rolling it out nationally, because we don't want to disappoint customers," he explained.

"We have almost a four to six month period. Manufacturing capacity is really not the issue. We have a capacity of 5000 units per month; we are going to be rolling out products from our new plant, Chetak technology plant as early as June and we will probably close the FY23 with a quarter million per annum capacity. It is the supply chain of few components, which is actually the critical issue," said Sharma.