Chip shortage hurting premium segment by 15-20%; expect recovery in 3-4 months: Bajaj Auto

Bajaj Auto came out with a weak set of sales numbers for the month of February. In an interview with CNBC-TV18, Rakesh Sharma, ED, Bajaj Auto, pointed out that retail weakness continued in the month gone by as well. According to his estimates, the auto industry witnessed a decline of 13-15 percent in February. In fact, January and February in Q3 saw double-digit decline for the industry, he shared.

"The retail weakness is certainly continuing and while the numbers for the industry are just rolling in, we are estimating that the industry is again in for a decline of about 13-15 percent over the last February (2021). Q3 January and February are very similar. They're in double-digit decline at an industry level," he said.

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On the ongoing semiconductor shortage that has been doing a number across industry players, Sharma concurred that the shortage has, in fact, aggravated the situation. He explained that the shortage is now affecting the entire portfolio, including three-wheelers. Also, the company is facing 15-20 percent shortfall in the premium segment as a result of chip shortage. Going forward, Sharma expects to see some recovery in the next 3-4 months as economic conditions start to improve.

"Our particular issue is explained by an aggravation of shortage on the semiconductor side. The semiconductor issue is affecting our entire portfolio now. So it's not just the premium end, except for certain lines in overseas markets, most of the markets, including three-wheelers, are affected by the semiconductor," he mentioned.

"In the higher end, we are facing 15-20 percent shortfall because of the semiconductor issue. One is expecting that as the economic conditions improve and there is a trickle down impact to the segments, we should see some kind of recovery in 3-4 months’ time for motorcycles as well," he explained.

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Additionally, he mentioned that that the company faced disruption in semiconductor shortage from one of its suppliers as well in the month gone by. Sharma highlighted that the company has been broad-basing its component supplies from different vendors.

"We were facing semiconductor shortages in January, but there has been a greater disruption for us as one of our key suppliers faced huge shortfalls, which got passed on to us. Given the fact that nobody can help the shortfalls, we have been broad basing our supply sources, going to multiple vendors," he said.