Strong year-on-year growth in retail sales in the festive season has helped Bajaj Auto Ltd. Executive Director Rakesh Sharma lift his annual growth outlook for India’s two-wheeler industry back to 6–8% in fiscal 2025.
Sharma is optimistic even as Bajaj Auto reported muted year-on-year growth in October sales. The company's total sales grew 2% to 4.8 lakh units, commercial vehicle sales were up 4% at 65,335 units and total two-wheeler sales grew 2% to 4.14 lakh units, according to an exchange filing. Total exports during the month grew 24% to 1.75 lakh units.
Sharma, in conversation with NDTV Profit's Tamanna Inamdar, decoded the festive sales numbers, comparing festive retail sales from Oct. 3 to Oct. 31 this year to when it fell between Oct. 15 and Nov. 12 last year.
"This frame has been a smashing for us as well as the industry, particularly last two weeks," he said, adding that festive sales could have gone worse.
"I think customers coming back in such strong numbers indicates that after the dip, which is expected in November and December, things should be looking good, back to 6–8% annual growth for industry," he said.
At the same time, festive season did start slow as run-up to Dusshera was a bit slow and we exited Q2 slower, Sharma said, attributing this to the company's lower annual growth industry outlook of 5-6%.
“We had said that the industry is in the 5–8% zone. I would still say maybe not 8%, but probably closer to 5%," Sharma had said in the second quarter earnings call.
The entry-level market is in decline, and the 125cc+ is showing 5–6% growth. So, overall, it is coming to 1–2% growth right now. That trend is very clear now, he had said.
However, this has changed now, as the last couple of weeks in Diwali market have been smashing and "has lifted our performance, as a result of which, forecast going ahead is back to 6–8%", he said.
On its October sales data, Sharma said billing data really clouds the actual picture. He noted that its focus area of 125cc+ segment, which is almost 53% of the motorcycle industry, has grown upwards of 20% year-on-year in festive season in retail terms. "Overall retail growth is of about 11–12%," he said, adding that over two lakh Pulsar motorcycles were sold in festive periods.
Retail sale of 36,000 units of Chetak was also an all-time high, according to Sharma and three-wheelers have come in with retail sale of 56,000 units. EV retail sales growth was in triple digits in the festive period, he said.
"This exit from April–October creates confidence for next six months," he said and added that market share estimate in its chosen segment will sooner or later reflect in Vaahan data. "This part of the industry has grown less than 21%, and fast growth has garnered some market share for us," he said.
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Here Are The Excerpts
Let's come to the numbers that we've seen for October and you know, let's start with what's happened with two-wheelers, a bit of a slide there, something that you were expecting, or was this a little disappointing, when you compare to what you had penciled in for the month of October?
Rakesh Sharma: Actually, the outcome in October has been a smashing success, frankly speaking, because let me just decode the October outcomes as per how we are looking at it within the company. The important thing is to look at retails and retails during the festive season. The billing numbers, which is what we say the sales to the dealers or wholesalers is this the time when we've gone into a destocking mode, because we were stocking up in August and September, and then there is a surge in retail festive. Therefore, the billing to dealers drops in October. It will continue to drop a little bit also in November, because we are all preparing for servicing the high peaks of the festive demand.
Now to understand how the festive has gone, it is important to compare apples and apples. So the right thing is to compare festive retails in this year's festival with retails in last year's festival, which are different calendar days. This year is from the third October to, let's say, 31st October. There is a little bit of a festival in the north, in UP and Bihar which will continue. Last year, it was 15th of October to 12th November. So to understand how the industry and how the company has performed, we look at retail sales in the festive period this year and in the festive period last year.
So now, when I look at this frame of reference, it's been a smashing month, actually, both for us, and I think the industry has also got lifted up with particularly the last two weeks of performance. Our area of focus, as you know, is the 125 CC plus segment, which is almost 53 % of the motorcycle industry. We have grown in retail terms, upwards of 20% in that and overall retail sales growth is about 11-12%. We have sold 200,000 plus Pulsars and our overall festive sales post Covid, is the highest ever festive sales we have recorded and in our premium end, we have had the highest ever sales when you put Triumph and KTM together, the premium bikes have done very well at retails of 36,000 units or so.
Chetak sales have also recorded an all-time high and finally, the three-wheelers has come in with quite a smashing performance with retails of almost 56,000 units. You know, the previous high was somewhere around 45-48,000 in that there is an all-time high retail of 7,000 units of EV three wheelers, which is all driving, you know, towards leadership in that segment too. So actually, just looking at the billing data, as we call it, really clouds the thing.
Let me come on that point, Mr. Sharma, because you make an important point. The way you look at data, I suppose, matters and today, perhaps the way the Street is looking at the data, as far as Bajaj Auto is concerned, is we are seeing an 8% drop in domestic two-wheeler sales YoY. You're saying that that is the sales to dealers. Retail Sales are even better, but it seems like it's the exports that have driven this month's sales, and if I look at it in view of what you said in your concall after your last numbers, where you looked at festive sales outlook a little dimmer than what the Street is expecting. How do I juxtapose the two? It's becoming difficult to get a clear picture. Is the two-wheeler auto industry under pressure or not?
Rakesh Sharma: We have always said that the way to look at the market is retail sales. Billing sales is all about, you know, every company, including ours, has their own approach to building up stock and managing stocks in the channel, and that doesn't reflect what is actually happening at the ground level. So in our internal discussions as well, or when we talk to analysts or to the media, our primary focus is always on how retail sales is happening, and that is all we are doing.
Now, the only thing which is different this month in the frame of reference is comparing retail sales of this month with the festive period of last year because if I simply compare October ‘24 retails with October ‘23 retails, you will find that our growth is 30% plus because last year, in October, there was only Dussehra and Diwali fell in November. So, we are comparing like for like. So, this is nothing new. It is always, you know, if you have to understand the industry, it's important to understand the ground level consumption and that is actually suggesting that the festive did start slow, the run up to Dussehra was a bit slow.
We exited Q2 a bit slow, and our annual outlook was between 6-8 % growth for the industry. It was dipping down to 5-6% but the last couple of weeks in the Diwali market, particularly, have been smashing, and that has lifted the whole industry, and obviously lifted our performance up, and as a result of which, I think the forecast led is back to a healthy to 6-8%.
That's an important point. Mr. Sharma, can I just come back to you on it? So, the forecast, which was 1-2% after the quarterly numbers were out for Bajaj Auto, and now that you've seen how festive has paired through is back from one to 2% to 6% to 8%? Am I understanding this correctly?
Rakesh Sharma: I don't know where and what this number of 1-2% is.
It has scared the market, this 1-2% number, and it's quoting you from the concall. So, which is why I want to just put it into perspective.
Rakesh Sharma: It may have been for you know, there are many questions which are addressed now, if people are selective, then I cannot do anything about it. But it could have been, you know, the September month that could have been a week into the festival. I'm not sure exactly what that 1-2% but we had felt that the growth will be between 5-8%.
I think that is a point which we have been making. In fact, the last two weeks, what is more important, actually, is how things stand now and how things stand now and given the flourish of the last two weeks, I think it's been a very, very good festive period.
So that's an important clarification from Mr. Sharma. It was always 5-7% and the last two weeks of the festive period have been very, very good. Is it possible for you to quantify it, Mr. Sharma, on how the last two weeks have been and then I'll just add one more question to it: do you see this sustaining? Is this a festive bump? Which, of course, in the entire industry, you see a bump during festive period, and then you sort of peter out. What is the kind of numbers that you see sustaining through?
Rakesh Sharma: As I said, I quantified it by saying that in our area of focus, which is about 125 CC plus segment in this 30 day festive period, compared to the similar period last year, our growth in retail terms is above 20% and at an overall level, it is, you know, 11% or 12% in motorcycles, in electric vehicles, it is in triple digits. So that is what the festive is. Obviously during a festive period, you know, if the average sales in a month is about 8.5% to 9% for the year, you know, arithmetically speaking, the festival period is about 12%.
So obviously there is advancement or postponement of sale, which bumps up the sale, like in the festive like you're saying. But when you start to see the festive could have gone worse, and then that would have put in some question marks about the months to follow. But I think the customers coming back to purchasing motorcycles in such strong numbers indicates that after the sort of dip which is expected in November and December, things should be looking good back to the kind of forecast we were doing of 6-8% for the industry.
Mr. Sharma, one would presume or am I presuming it correctly when I hear you right now, is that forget October, because that would have two festivals bumping up. But the trend seems to suggest that October plus November, or October, November, December, put together, could well have this 6-8% average growth rate YoY quarter of last year? Would that be something that you would believe could happen?
Rakesh Sharma: Yes, for the industry, I would say that it should be in that zone difficult to predict exactly, but a good festive brings back, you know, a slipping estimate which was slipping a little bit, it brought it back very, very strongly. I would say, yes, it is and it's important also to, if you have to understand the industry, to not just look at, you know, one week or two weeks, and be so sensitive to that these trends unfold over a few weeks and months. So just taking a week out and seeing how it is growing is very, very misleading.
But I think what you're saying, I would sort of support that kind of thing. I would, in fact, extend it to the whole fiscal rather than because again, you will see in November there will be an impact. December is a low month because, you know, people sometimes wait for the new model year, etc. Therefore, it is important at least from our perspective, it's important to look at the next six months and this kind of exit from April to October creates confidence for the next six months.
Just one point Mr. Sharma on market share. So in October, at least in the domestic segment, there seems to have been some slide in market share. Do you see that coming back, buoyed by new launches? What is the outlook there?
Rakesh Sharma: See again, the market share. I would even, for our internal analysis, wait till middle of November or end of November, frankly speaking, because the best way to look at market share is from Vahan, and the crush of sales is so high in the last three or four days that it does take time for Vahan to be updated. But having said that, our estimate in our chosen segment, which is, you know, 53% of the industry, which is motorcycle industry, which is the 125 CC plus segment, like I said, we've grown retails by 21% and sooner or later, it will reflect in Vahan, like it will for everyone else. We believe that this part of the industry has grown less than 21%. It has, of course, grown, but less than 21% and because we have grown faster, I would actually say that we have garnered some market share over there.
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