Bajaj Auto To Invest More In Brazil Amid Revival In Exports

India’s Bajaj Auto Ltd. has earmarked more investment for its Brazil unit, even as the wider exports market shows signs of a revival.

The board of directors of the Pune-based automaker has approved an equity investment of $10 million, or Rs 84 crore, into Bajaj Do Brasil Comercio De Motocicletas Ltd., according to an exchange filing on Wednesday. The proposed investment, to be made in a phased manner, is a related-party transaction on an arm’s length basis.

The funds will be used for expanding the production capacity beyond 20,000 units each year and doubling the sales footprint to 50 dealerships, Chief Financial Officer Dinesh Thapar said in a post-earnings virtual media scrum on Wednesday. That will bring about some localisation as well, as Brazilian laws require some amount of local input—welding, paintshop, etc.— when the production increases beyond 20,000 units per annum.

Bajaj Brazil was incorporated on Mar. 31, 2022, to tap into the “attractive opportunity” that the Latin American country has as a motorcycle market. In June 2024, the wholly-owned subsidiary commissioned its manufacturing facility at Manaus Free Trade Zone with an annual capacity of 20,000 units.

In a little over two years, Bajaj Brazil has brought business worth Rs 250 crore to its Indian parent by selling 9,000 units of ‘Dominar’ motorcycles. Bajaj Auto rebrands its ‘Pulsar’ range as ‘Dominar’ in Latin America.

The investment is significant, for it comes at a time when Bajaj Auto is seeing some signs of revival in its exports business.

In the quarter ended Sept. 30, 2024, the company’s two-wheeler exports grew 5% year-on-year to 3,96,407 units, according to quarterly earnings released on Wednesday. Sales of three-wheelers rose 21% over the previous year to 48,386 units.

While the Latin American business continues to grow, especially in Mexico, green shoots are also now visible in Nigeria that was earlier in the throes of record-high inflation. That bodes well for business in continental Africa, Thapar said.

With 66 dealerships across 75 countries, Bajaj Auto commands a global two-wheeler market share of 26%, according to the Global Bajaj website. In the three-wheeler space, it has cornered three-fourths of the market.

On Wednesday, Bajaj Auto shares rose 0.85% to Rs 11,617.55 apiece even as benchmark Sensex ended the day 0.39% lower at 81,501.36 points.