Bajaj Auto Says Open To Bigger CNG Motorcycle After Freedom 125 Launch

Bajaj Auto Ltd. is open to the idea of a bigger CNG motorcycle, as the platform is a portfolio brand and not just a product, according to the management.

“This platform can spawn on both sides, on the higher-end side and the lower-end side, newer variants beyond these three, and we will foresee which is the right time to introduce those,” Rakesh Sharma, executive director at the Chakan, Pune-based automaker, said in a post-earnings analyst call on Tuesday. “So yes, Freedom is actually a portfolio brand, and it's not just a product brand.”

On July 5, Bajaj Auto launched the Freedom 125—the world’s first CNG motorcycle with a range of 330 km and a starting price of Rs 95,000. The motorcycle gets a 2-kg underseat CNG tank as well as a 2-litre petrol tank upfront. A rider can choose between the fuel options using a toggle on the handlebar-mounted switch cube.

The company, however, refused to comment on how much the Freedom 125 would add to its incremental revenue in the coming quarters, nor did it speak about the margin hit in the first few months of production.

It’s still early days, Dinesh Thapar, chief financial officer at Bajaj Auto, said in a post-earnings press conference. While the addressable market—the commuter class of 100-125-CC bikes—is large at 750,000 units, the company is eyeing an initial production capacity of 10,000 units per month and aims to scale that up to 40,000 units by the end of the year.

To be sure, the response to the world’s first CNG motorcycle has been healthy from the outset. Bajaj Auto has garnered 4,200 bookings for the Freedom 125 until July 15. The motorcycle will be retailed in Maharashtra and Gujarat first, followed by a pan-India rollout.

The two-wheeler maker isn’t looking at exports yet.

“There will be five-six markets that I think are being looked at. But clearly, that will be much later because the current priority will be to get the Freedom 125 going over here and really tap into that large opportunity,” Thapar said.

Then there is the matter of GST.

According to Thapar, CNG—as compared to petrol—is a much cleaner fuel, and there is a case to be made for lower taxation of vehicles powered by the alternative fuel.

“Look, if electric vehicles can be taxed at 5%, there is no reason why [a vehicle powered by a relatively cleaner fuel like] CNG needs to be taxed at 28%—on a par with petrol,” he said. “Inherently, GST on two-wheelers in this country is much higher than those in comparable economies where motorcycles are a primary means of transport,” Thapar said.

“There’s clearly a representation with the government that’s underway. Why can’t CNG vehicles be taxed at, say, 12%, hypothetically?”