Bajaj Auto expects Q2FY22 volumes to be better than Q1FY22

“We were taking a cautious stand on its recovery because demand is a bit fragile. So we knew we would under-recover the cost increase of Q1 but what was a bit of a surprise was the severity and the sweep of the second wave of COVID-19, which hit us in volumes,” Sharma said.

However, a stronger currency and a better product mix helped the company.

Speaking about the raw material cost, Sharma said the firm is expecting headwinds. “We and the industry have already taken the price increases from the first week of July onwards but that doesn’t fully recover the cost increase,” he mentioned.

Sharma believes Bajaj Auto is ahead of its competitors, both domestic and international, in taking price increases.

For the last two months, the company has been clocking more than 2 lakh volume growth in exports. “We think that we should continue despite all the price increases. Philippines, Cambodia, Uganda are large markets that have been affected by the pandemic. We are hoping that as the quarter progresses, the pandemic will recede over there and these markets should come back and strengthen the export performance further. I guess that would happen by end of Q2 or the beginning of Q3,” he explained.

Q2FY21 got the double benefit of pent-up demand rushing in and the channel stocks being very low because of the BS-VI transition. “However, this year Q2, while retail will be ahead of last year, billing would be very similar because there is sufficient stock in the channel,” he stated.

Sharma said that if there is no severe third wave of COVID-19 on the horizon, there should be low single-digit growth in the motorcycle industry.