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Informist, Tuesday, Jan. 28, 2025

By Anand JC

MUMBAI – Bajaj Auto Ltd. will launch a new electric rickshaw variant by the end of the ongoing financial year, and will house it under a separate new brand 'Bajaj Gogo', the company said during an analyst conference call Tuesday. The company expects a sizeable opportunity in the space, Executive Director Rakesh Sharma said.

The company's market share in electric vehicles increased to 35% in Oct-Dec from 13% in the same period a year ago. Bajaj Auto expects to outpace the overall electric vehicle industry's growth rate going ahead, Sharma said. 

Bajaj Auto's electric rickshaw line-up will feature a variant which is larger than the traditional rickshaws, providing the option to ferry passengers along with cargo. "We found that there is a need for this even in electric. We found that in the core urban areas, a smaller vehicle is preferred, but as you start to go into suburban areas or smaller towns, we find that you know a larger body vehicle is preferred," Sharma said. The company already sells a fuel-run three-wheeler of that size, but intends to introduce an electric variant as well. 

This vehicle may be launched at the end of March, but authorities' permissions could cause a week's delay, Bajaj Auto said. The company feels this is a very fragmented market, with many corners being import-dependent, a lot of it being "substandard". Sharma said the Pune-based company hopes to organise this market and bring in fresh new business.

EXPORT DRIVE

In the near term, Bajaj Auto expects its exports business to grow 20%. "I would not like to hazard very long-term guesses on this, given the geopolitical uncertainty, the macroeconomic uncertainty which are there all over. We are taking it quarter by quarter," Sharma said.

The company's broad-based export growth in Oct-Dec benefited from a revival in the African market, but it says it hasn't completely recovered yet. "The recovery in Africa is driven ultimately by huge requirement for people to move around. It gets interrupted by macroeconomic issues, particularly on currency side. Pricing increase makes it difficult for new customers to buy, we aren't out of the woods," Sharma said.

A major laggard for Bajaj Auto's exports in the December quarter was its KTM line-up. KTM accounted for 2% of exports Oct-Dec, down from 5% in 2023-24 (Apr-Mar). Sharma said the company will get more clarity on KTM by Feb. 25. While its exports have fallen, domestic sales of KTM motorcycles have not been impacted. 

RELIANCE ON 125CC

Bajaj Auto reiterated that in the motorcycle business, it is focusing on getting a leadership position in the 125cc and above segment, which is the upper half of the segment. Growth continues to be driven by the upper half, which is currently growing at over twice the rate of the 100cc segment. While Bajaj Auto maintained its market share in this segment, its share in the bottom half reduced as it has stayed away from discounting.

However, this strategy also meant that it couldn't grow its market share in the upper half. "There, the performance in between Q2 (Jul-Sept) and Q3 (Oct-Dec) has been stagnant. We have not increased our market share over there. And one of the things is we have not participated aggressively in the discounting and it happens in the month of October itself," Sharma said. 

CNG PROSPECTS

Bajaj Auto currently sells three variants of its compressed natural gas-powered motorcycle, Freedom125. Since August, dealers have sold almost 15,000 bikes. Adoption of the Freedom125 has been high in areas like New Delhi and Kerala where CNG pump density is high. "...we have found that where there is density, let's say, 40 vehicles per pump kind of a level, the adoption rates are very high. But when the density goes down to let's say 100 vehicles per pump kind of a level, the adoption rates almost halve," Sharma said.

While the growth of the Freedom125 was explosive when it was first launched, now it is not so, Sharma said. The variant is currently seeing a steady step-by-step growth.

"We are going to accelerate, do whatever it takes to accelerate this growth by having a whole lot of engagement both in terms of communication and direct engagement with customers on the ground and familiarise them with this," Sharma said. Bajaj Auto will target cohorts such as gig workers through some of the quick commerce and e-commerce firms, and taxi fleet operators. 

"We have to dismantle the wait and watch attitude of the majority of customers, which will happen hopefully over a period of time," Sharma said.

Bajaj Auto in the December quarter completed the full roll-out of its credit subsidiary Bajaj Auto Credit Ltd. At the end of December, the arm financed nearly 520,000 vehicles and built up a little over INR 70 billion of assets under management. The December quarter was the first time that the subsidiary delivered a profit, of INR 520 million. 

The company announced its results post market hours on Tuesday. Its shares closed the session at INR 8,398.40 per share on the National Stock Exchange, up 0.2%.  End

Edited by Akul Nishant Akhoury

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