Bajaj Auto witnesses demand weakness in January; exports holding steady
Bajaj Auto Ltd, on Tuesday, came out with its January sales numbers. To get a better sense of the on-ground reality, CNBC-TV18 spoke to Rakesh Sharma, ED, of the company. Sharma mentioned that the company is witnessing demand weakness, which aggravated even more in January. He, however, said that exports have been healthy and he expects the momentum to continue.
Bajaj Auto Ltd, on Tuesday, came out with its January sales numbers. The company reported a 15 percent decline in total sales to 3,63,443 units in January 2022. Bajaj Auto had sold 4,25,199 units in the same month last year.
Total domestic sales for the company stood at 1,49,656 units in January as against 1,70,757 units in December 2021, down 12 percent, while total exports were also down 16 percent at 2,13,787 units as compared to 2,54,442 units in the year-ago period. The company’s domestic two-wheeler sales in January 2022 were down 14 percent at 1,35,496 units as against 1,57,404 units in the same month last year.
To get a better sense of the on-ground reality, CNBC-TV18 spoke to Rakesh Sharma, ED, Bajaj Auto.
Sharma said that the company is witnessing a lot of weakness in demand. He added that the weakness in demand got aggravated in January. He explained that company's demand is commensurate with the industry environment, since motorcycle segment witnessed a decline of 17 percent in registration numbers last month.
"Since the festive period, I have been saying that we are picking up a lot of weakness in demand which has only got aggravated over Q3. January was a big dip and I would go back to the registration numbers, which provide the most authentic sort of pulse for what's happening out there. And there is a dip of almost 17 percent for the industry in motorcycles in January compared to the previous January. So certainly there is a strong weakness there in the demand environment," he said.
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Sharma believes there is an erosion of pricing power in the two-wheeler segment. He, however, clarified that the weakness is not localised, there is a structural issue in the two-wheeler segment. Emphasising on it further, he added that there is a double whammy of prices going up and income levels coming down.
He said, "The point is that tier-I, tier-II, tier-III, rural, urban, metro, higher-end motorcycles, lower-end motorcycles, everywhere, there is a double-digit decline. So it's an endemic. It's not localized to a certain state, which actually very strongly suggests that there is a structural issue."
"The structural issue is the erosion of the purchasing power. At the same time, the cost of the two-wheeler has gone up, partly because of material costs and in a large measure because things we have done sometimes overreach in regulatory impositions, etc, they have caused the prices to go up. So this double whammy of prices going up and real income for that segment of population going down is prevalent, almost everywhere. So it's not a localized issue," he explained.
On exports, Sharma added that overseas demand is holding steady for the company. Going ahead, he expects the momentum to continue.
"Exports is holding steady. The negative, which you see compared to January of last year is because of the base effect. December and January were very big months last year, because that's when the pent-up demand came rushing in. But sequentially, exports have been showing very good numbers, and we expect that momentum to continue," he said.
On Tuesday’s Budget, Sharma believes it to be realistic and focussed on fundamentals. He believes the Budget reiterates a strong support towards electric vehicles (EVs).
"The budget is realistic, it's focused on fundamentals and modernizing the country. The aspect, which is very pleasing, is that there is a strong signal from the government of its support of electric vehicles (EVs)," he added.
Watch the video for the full interview.
(With PTI inputs)
(Edited by : Dipikka Ghosh)
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