New Delhi: Bajaj Auto is on the prowl for a better grip on both, the domestic and export two-wheeler pie. Lined up for launch this fiscal are a variety of two-wheelers across ICE and electric segments: a world first CNG motorcycle which could slash the fuel expenses of buyers by half, a mass market Chetak electric scooter, and six new models of the Pulsar. After all, the company’s stated objective is to continue driving top line growth without diluting profitability.
This attitude has reaped rich dividends for Bajaj. In the just-concluded 2023-24, the company claims to have wrested eight percentage point share from the market leader in the upper end of the 125 cc segment. Rakesh Sharma, Executive Director, said that in the March quarter of 2024, domestic motorcycle retail grew “twice the rate of others, and in the 125cc plus segment, our retail grew four times that of others”. Since three-fourth of Bajaj’s topline comes from the 125 cc bike segment, gains here are critical to both, topline growth and profitability.
Sharma said that “our market share in the upper half (of 125 cc) now stands at 27%, a gain of 5% and just 2 percentage points away from leadership. At the start of the year, we were 10% points behind the leader. So, we’ve closed the gap by 8 percentage points. This is the outcome of a slew of targeted new launches, nine of them in FY24, spanning the 125cc to 250cc class, which means we have a proposition for all segments of customers – commuter-oriented, style inspired, or high performance-led customers across all demographics.”
Pulsar alone has become a INR 10,000-crore brand, Sharma said, and the “biggest” Pulsar yet is being launched in May this year. The company has already announced a capex of INR 700-800 crore this fiscal, primarily for expanding three wheeler production and some investment in electric vehicles under the Chetak brand.
All in all, in FY24, the company claims to be the biggest player in the mass market 125 cc bike segment and three-wheelers and third in the electric two-wheeler pecking order.
CNG bike
Bajaj Auto will unveil what it calls a “world first” CNG bike this summer, which will likely halve the fuel cost for commuters. The bike has been long in the making, with research around a CNG-petrol dual fuel bike going on for many years. Sharma said that the market size for “mileage conscious” consumers was over six lakh units per month and about two -thirds of this market has access to the CNG infrastructure. Bajaj is no stranger to CNG vehicles since it claims nearly 90% share of the domestic CNG three-wheeler market already. And as for overlap of the ambitions between a growing electric vehicle market share through Chetak versus the new CNG bike, Sharma said that at least for three-wheelers, the differential in expense for both the versions was not very significant. If the same argument were to be extended to bikes, perhaps the electric and CNG-petrol bikes would not cannibalise each other.
Chetak Technology
In yet another smart move, Bajaj Auto has vested almost all R&D responsibilities of the group in Chetak Technology, a wholly-owned subsidiary. Earlier this week, company veteran Abraham Joseph was appointed as the MD of this subsidiary. Joseph has been with Bajaj Auto for three-and-a-half decades. Not only will Chetak Technology be responsible for R&D for all types of products, it will also explore hydrogen vehicles. So, going into the future, Bajaj wants a share of ICE, electric, CNG and hydrogen two and three-wheelers.
EV biz expansion
The EV trajectory of Bajaj has gone just one way: Up. In the March quarter, sales of its electric scooter Chetak logged 40,000 units. This was more than the number of Chetak scooters the company sold in the entire previous fiscal. In Fy24, Bajaj’s share of the electric two-wheeler market more than doubled to 13% from 5% in the previous fiscal. Now, as a mass market and more affordable Chetak is on the anvil, Bajaj may have a tough fight on its hands.
Ather has just announced Rizta, the family scooter, and other competitors are also gearing up for launching more pocket friendly electric scooters. What will work in Bajaj’s favour vis-a-vis pure electric companies like Ola, Ather and others is the former’s existing vast distribution and sales network. Bajaj is already expanding its electric vehicle distribution footprint further. Also, Bajaj has the option to scale up production in case of a demand bump with flexible manufacturing lines.
The trouble Bajaj has been facing – indeed all electric two-wheeler makers have been facing – is the drag the EV business brings on the margins since it is still not profitable at the unit level. Sharma said that this had more to do with the pricing of Chetak – with stiff competition and policy uncertainty, recent price cuts across the industry have not helped matters – compared to the overall cost reduction at Bajaj Auto. Will this skewed math improve after the company unveils the mass market Chetak? Only a further, steep increase in sales numbers of Chetak will lessen the drag on Bajaj Auto’s overall margins and profitability.
