Bajaj Auto’s Sept sales drop as motorcycle demand wanes

Bajaj Auto’s Sept sales drop as motorcycle demand wanes

Mumbai: Bajaj Auto Ltd., India’s second-biggest motorcycle maker, posted a 23% annual fall in vehicle sales in September, but said a newly launched motorbike would help improve sales and operating margins.

Bajaj, which trails Hero Honda Motors Ltd, sold 232,496 units in September, compared to 300,141 units in the same month last year. Sales of motorbikes fell 25% to 204,152 units, and its two-wheelers slipped 24% to 206,208 units.

Sales of its higher-margin three-wheelers also fell 6% to 26,288 units, while exports rose 30% to 48,048 units.

Bajaj vehicle sales from the start of the fiscal year in April are down 13% from the same period a year earlier and motorbike sales are down 14%, it said.

Hero Honda said on Monday two-wheeler sales in September rose 4.3 percent to 314,567 units. Third-ranked motorcycle maker TVS Motor said its motorbike sales fell nearly 50% in September.

Bajaj sold 18,131 units of its new 125cc bike XCD, and said it had advance orders for October’s production target of 50,000 units. It said it would expand output to 75,000 units a month.

“(Bajaj) is hopeful that the second half of the current fiscal will be witness to not just a positive sales growth for its motorcycle portfolio, but also a significant improvement in its operating margins," it said.

The new bike would also help Bajaj get nearly 40% of the overall motorbike market, it said. Hero Honda has half the market and has vowed to retain that share.

Indian vehicle makers sold more than 6.5 million bikes in the domestic market in the year to March, but have seen sales slide in recent months due to higher interest rates, which have bumped up interest on vehicle loans by 250-350 basis points.

Bajaj has said it would exit the highly competitive 100cc segment that Hero Honda dominates, by shifting consumers to higher-margin 125cc and more premium bikes.

At 0806 GMT shares in Bajaj were down 1.2% at 2,510 rupees in a Mumbai market that was up 0.2%. Bajaj shares trade at 19.7 times forecast earnings compared to 16.7 times for Hero Honda, whose shares were down 1.3% at Rs735.