Q&A: Bajaj Auto dominates 150cc+ segment with over 40% market share

Yes, we are dancing around the 20% mark and it is true that the commodities are soft right now, early action in pricing has given us the benefits and it's just a matter of now before the mix falls in place. And we could probably be on the right side of 20 also. But it's very difficult to be precise at this point in time.

A: So in the domestic business, while the industry is about 50% above the 125cc mark, which is what broadly we are defining as premium motorcycles, where people like to upgrade we are at 65%. So 65% of Bajaj domestic motorcycles are 125cc and above.

A: The market share at an overall level in the domestic motorcycle business has gained a couple of percentage points between Q2 of last year and this one in retail terms. We like to look at understanding the markets and look at market shares on the basis of retail rather than billing, because billing, even though it drives the P&L, really depends on channels stocking strategies, etc. So a couple of percentage points we have gained.

More importantly, our area of focus, the segment that is enjoying the tailwinds in the industry, which is the 125cc plus segment we are now at about 30% market share, and within that also the 150cc plus segment which is the traditional home ground of Bajaj Auto we have now crossed 40%. So we are quite decisively the market leader over there.

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A: On the e-two-wheelers, which is Chetak as you know a few quarters ago, we were really preoccupied with getting our supply chain and R&D, right. We had a hiatus in the marketplace. But once that has been put right from quarter one, around February-March onwards, we have a much better view of the availabilities, costs and margins. Therefore, we have stepped on it and you can see that our market share has increased from 4% exit of FY23 to 11% in September, and that is the basis of availability, that is the basis of pricing and better pricing, it is because we have been able to restructure our product costs.

Going forward, the same work is going to help us to continue to expand the network. We are right now in 120 cities by the end of the year, we should be in 180 cities with an Exclusive Chetak Experience store format. It will help us to expand the range, you will see in this quarter that we will launch more products and in six months following that you will see another bout of range expansion.

The third thing which it does is allows us to therefore increase our volumes. We are looking forward to breaching the 10,000 mark in quarter three and building on that as we go forward. So that is the story of electric Chetak. But the thing which we are watching very carefully is how penetration is improving in electric two-wheelers. For some months now it has been stagnant at 5% of the motorcycle space and this is particularly after the FAME subsidies were cut. There is going to be some sparkle in October, but the dust will settle down in November-December allowing us to judge whether there is really the industry is going to break free from the 65,000 units, which has been stuck per month, which has been stuck for the last 3-4 months. But be that as it may, we are very, very, very clear that we are going to be pushing in this.

On the three-wheelers, before I just get on to the electric three-wheelers it is pertinent to mention that when you asked me about market shares in the previous question. The star performer really is the three-wheeler this quarter with our highest ever sales in a quarter and in a month, because 50,000 units in September, and our market share surged to 80%. So, therefore, that sets a very good benchmark for us when we produce the electric three-wheeler.

Again because of the supply chain and R&D work the three-wheeler margins are agnostic to the powertrain, I mean, we are making very similar margins in the ICE side as well as the electric side. The electric three-wheelers were launched by the end of quarter one and we have done a quarter to almost 2,000 units of electric three-wheelers have been put into the marketplace, very carefully selected cities in the north. We have surged to a 70% market share in the city, which we have launched and we got tremendous user feedback, some minor improvements, that have to be done and we are rolling them out we are already in 10 cities. In the other six months, we should be in 40 cities.

What this does for us is that this is absolutely incremental business because as you know the north and parts of the east there have severe restrictions for ICE autos and that space has been occupied by these contraptions, these e-ricks, which have been hurriedly put together and imported from China and first lead acid-base and then lithium-ion. So now with the e-auto our experience in our pilot market tells us that all those people who have had two years of experience with e-rick are very good targets for upgrading to e-auto. So this brings through absolutely new business to us, which is even EBITDA-wise at the same level as ICE autos.