Pune-based motorcycle major Bajaj Auto has reclaimed the No. 2 spot in the motorcycle segment following a scare in the first half of the year when it lost ground to Japanese auto-major and scooter specialist Honda Motorcycle and Scooter India (HMSI). At the end of December, Bajaj Auto sold 14,76,990 motorcycles, against 14,67,402 by HMSI, a difference of merely 0.006% or 9,588 units. Compare that with a 30% and 27% difference in units sold by Bajaj over those by HMSI in FY17 and FY16, respectively, and the significance is evident. Bajaj has regained ground in the last quarter after trailing HMSI by 37,000 units in the first half of the current fiscal. In the April-September 2017 period, Bajaj posted a 10% decline in sales, while HMSI reported a 20% growth. This tilted the tables. In the third quarter (October to December 2017), though Bajaj saw only a 1.5% growth year-on-year, that was enough to put it back in the lead. A reversal in trend is clearly a positive development for Bajaj, but it still leaves the company virtually neck-and-neck with HMSI, with each of the companies commanding about 15% market share. Analysts remain wary and say Bajaj’s performance leaves more room for improvement. Analysts at Nomura said, “Bajaj Auto reported only 6% growth (in the month of December 2017) in domestic 2Ws despite a low base. Management expects volumes to improve. Given the weak domestic 2W volumes of Bajaj Auto, there could be downside risk to our estimates.” Analysts at Jefferies opined, “For Bajaj, it was largely status quo with exports and three-wheelers growing strongly but continued disappointment in domestic motorcycles.”
Exports for the company have improved in the current fiscal compared to a de-growth in the previous year. In the April-December period, export volumes grew 11%, against a decline of 16.5% in the corresponding period of the previous year.
After almost a year-long slump in volumes since demonetisation, when the company had seen its sales drop by about 15%, Bajaj had first seen a revival in its volumes in September, owing to the start of the festive season. The company had attributed the growth to entry and premium segment motorcycles such as the refurbished Platina range, the CT 100 and new Pulsar variants (Pulsar NS and Pulsar 160cc). However, HMSI, which has remained in third place for the past seven years, had stolen the number two spot by then. Only a rev-up in the October-December period has saved Bajaj the blushes.
At the end of the first half of 2017-18, Bajaj had seen its market share slip to 15.5% from 18.7% in the year-ago period. While one of the key reasons cited by the company for the decline was the shift to the new emission norms from April last year, analysts feel it is lack of new launches and shifting preference of Indian buyers to automatic scooters and bigger motorcycles, which has dented Bajaj’s volumes.
Analysts at JP Morgan had earlier said, “…we remain concerned about increased competitive intensity in the 150cc segment (and within that 150-250cc segment) with a number of competitors (Yamaha, Honda, TVS and Hero) planning new launches here. Bajaj Auto needs a successful launch here, which till now has not come.” And the few launches that have come such as the new Dominar have failed to deliver on their promise. Bajaj Auto, however, is confident that the recovery will continue. The company is going to launch two Discover models in January. A new Avenger, rumoured to have a 400cc engine, is also expected to be launched by the end of the fiscal.
