New Delhi Bajaj Auto executive director Rakesh Sharma said Bajaj Auto expects domestic motorcycle sales to pick up as the supply of semiconductor chips improves in the second quarter of this fiscal.
However, the Pune-based two-wheeler maker expects exports to decline with fears of a global slowdown as several economies look towards a slowdown. The share of exports in the annual revenue of the company is more than 60%.
“Our production plan was impacted by about 25% in the domestic motorcycle market and about 40% in manufacturing. Same was the case with three wheelers. This led to a steep fall in channel shares. Our stock levels are around two-three weeks for motorcycles and only one week for three-wheelers,” Sharma said during the first quarter results announcement on Tuesday.
“Motorcycle distribution is a two-tier business (Bajaj Auto ships to its larger dealers, which then supplies to smaller dealers in Tier I and II towns and cities), and serves the market as a whole across the country. We need at least six weeks of channel stock. Now, we are less than half the level we should be at, which has led to retail losses,” Sharma said.
He said the chip supply situation is improving dramatically, and the company has the worst shortfalls behind it. “We will look at replenishing our stock levels as soon as possible, and by the end of the September quarter, we should be able to recover the market share we lost in Q4 FY22 and carry it forward as the festive season approaches. should.”
However, Bajaj Auto’s high exposure to export markets, 62.2% in Q1FY23, up from 60.2% in March quarter), according to brokerage firm Prabhudas Lilladher, makes it vulnerable to external uncertainties like global slowdown, inflation and higher interest rates. The reduction in rates has resulted in a decrease in demand.
“Because we are in the middle of this storm, there will definitely be some adverse impact on (international) shipments in the second quarter. But natural demand will come in the third and fourth quarter, and we should start seeing better numbers, unless there is a major downturn in the world economic order,” Sharma said during the conference.
Talks of a possible complete ban on two-wheelers in Nigeria could also dampen Bajaj Auto sales in the short term as sentiments take a hit in the African nation.
However, no formal notification has been issued yet. Nigeria accounts for about 25% of the company’s outbound shipments.
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