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Informist, Wednesday, Aug. 6, 2025

NEW DELHI – Bajaj Auto Ltd. will likely deliver only 50-60% of production plan for Chetak electric scooter and 70-80% of its electric three-wheeler output plan for the September quarter due to the rare earth magnet shortage issue, Chief Financial Officer Dinesh Thapar said in a post-earnings press conference held virtually Wednesday. Thapar said he expects the company to hit around 40% of its manufacturing target for August due to "tactical interventions" such as looking for additional sources of key input materials and developing less-rare-earth motors.

The Pune-based automaker's Managing Director Rajiv Bajaj in late July had claimed that the company will likely see zero production of electric vehicles in August. Highlighting the dynamic nature of the situation, Thapar said the company is trying to salvage the situation.

"In August, it could be about 40% of volume, which might have looked near zilch a few weeks back when he (Rajiv Bajaj) made the comment. And who knows, maybe in a few weeks from now, one of the supply sources that we're working with might unlock," Thapar said. 

In June, the company could meet only 60% of its manufacturing plans for Chetak electric scooters and only 75% of the production target for electric three-wheelers. Bajaj Auto expects production of electric vehicles in August to be "very strained" due to the rare earth magnet issue despite intervention tactics. As such, it expects to lose market share, it said. "Clearly, we would have liked to have ended the quarter with far more inventory than we could have filled in ahead of festival (season)," the executive said. This (rare earth magnet issue) is expected to dent the demand for its automobiles during the upcoming festival, Thapar said,

Thapar clarified that the company isn't staggering production volumes consciously. "Even if we unlock a lot of supply (of rare earth magnets), there's certainly likely to be an impact in terms of the festive loading that we would have liked," he said. The company did not revise its sales volume guidance for the ongoing financial year, retaining it at mid-to-high single-digit growth.

"I think the only reset in the outlook that we've forced to look at is driven out of the supply constraint of quarter two (Jul-Sept). We are hoping that quarter three (Oct-Dec) is when the tactical interventions that are being taken should help bring business back to normal," Thapar said. 

SALES PERFORMANCE

Bajaj Auto sold 1.1 million units in the June quarter, registering a paltry growth of 1% on year. Domestic sales fell 8% to 634,808 units while exports grew 16% to 476,429 units.

"On exports, we clearly feel more comfortable. We're clearly seeing volumes coming back to levels of 170,000-180,000 units (per month)," Thapar said. These figures could go up if sales in Nigeria pick up to add to a buoyant Latin American market. Export revenues hit a quarterly record high in Apr-Jun even though export volumes are still around 20% lower than their record highs, Thapar said.

Though better than previous years, domestic motorcycle sales saw subdued demand in the June quarter. "But the fact is that it was soft and therefore had a subduing effect on the overall growth numbers," Thapar said. The Pulsar maker took actions such as price changes and promotions to restore its competitiveness in the market. 

The northern and central Indian markets did well due to the marriage season during the June quarter. However, Thapar mentioned that south India unexpectedly performed poorly compared to other regions. This dragged down the company's overall sales growth. 

Smaller towns are seeing more sales growth compared to larger metros, as seen in recent quarters. "Growth is really being led in many ways by the smaller towns," Thapar said.

Earlier in the day, Bajaj Auto reported a net profit of INR 20.96 billion for the June quarter on revenue of INR 125.84 billion. Its shares closed the session at INR 8,178.50 on the National Stock Exchange, down 0.6%.  End

Edited by Tanima Banerjee

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