Bajaj Auto is all set to cover 80% of the addressable market for Bajaj Freedom 125 CNG bikes by next month, according to Rakesh Sharma, Executive Director of Bajaj Auto.
He explained that the addressable market is the 100-125cc segment, which makes up 75% of the two-wheeler industry. They consider the part covered by the CNG gas distribution network as the addressable market, of which they have covered 33% as of August.
Managing Director Rajiv Bajaj recently told CNBC-TV18 that the two- and three-wheeler maker aims to clock monthly sales of 40,000 units of its CNG motorcycle by January 2025.
"We are hoping to push that to 20,000 vehicles next month. And Rakesh Sharma just gave us clearance to expand to 40,000 vehicles. So by January, if not before, we should be headed to about 40,000 per month for this wonderful motorcycle," he said
Sharma also discussed the outlook on the company's overall retail sales in Nigeria.
After a very long time, sales in Nigeria touched 20,000 units versus earlier 13,000-16,000 units, he said, adding that he expects further improvement.
Bajaj Auto August sales grew 16% year-on-year (YoY) and 13% month-on-month (MoM) with the two-wheeler segment continuing to lead.
The current market capitalisation of the company is ₹3,09,856.03 crore.
This is the verbatim transcript of the interview.
Q: Give us an update on how is the export situation. Are things improving? And in particular, Nigeria - you have told us in the past that it was 15,000-20,000 odd, still far away from the peak of 50,000 what is the recent update?
A: Yes, the exports business had a little bit of uptake, and particularly retails in Nigeria, after a very long time, touched 20,000 units for us, because they were around 13,000-16,000 and this is a very good sign because the larger retailers and wholesalers have started to buy in. And hopefully, we will see further improvement in retail sales going forward in Nigeria.
Q: Can you tell us what would you project or want to see as a sustainable, steady monthly run rate in Nigeria? By the end of the fiscal, what will be the steady-state monthly run rate for the business here?
A: It is very hazardous in this kind of volatile situation to give you very precise numbers. I can only say that there has been an improvement. We are very confident that there will be a continued improvement as we go down the year. Last month in Nigeria was a very good sign. We are expecting the same kind of thing to continue with a little bit of improvement. It is the slope of the curve, which one is uncertain about. I think the direction is upwards, but the slope is what is uncertain, barring any new bombs, which explode.
Q: About the hybrids segment - Rajiv Bajaj, in his last conversation with us, was extremely bullish on the segment. And just want to know how is Freedom 125 doing. This has been the first full month. Deliveries are started. So what is the uptick and what are the expectations here?
A: We have had an outstanding response. By the end of August, we have covered about 33% of the addressable market. When I say addressable market, it is largely the 100 CC-125 CC segment, which is about 75% of the two-wheeler industry, and the percentage covered by the CNG network, is what we regard as the addressable market. So we had covered 33% of that. The dispatches were about into six states, we are at about 9,000 units, and we have retailed about 5,500 of those.
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We have got about 12,000-13,000 paid bookings as I speak. More importantly, the feedback from the customers and the dealers is very positive.
Q: Just to get those numbers, you said 5,000 bikes sold, 12,000-13,000 bookings. And you said 33% of the addressable market, could just explain?
A: 33% of the addressable market had been addressed in August because it is a phased rollout. By the end of September, we would be in 80% of the addressable market.
33% of the market, which is addressable - all those markets which are served by the CNG gas distribution network, we have covered 33% of that. By September, given the confidence, that the teams are experiencing, the dealers are experiencing, and the adoption by the customers, we should be able to address about 80% of that by the end of September.
Q: The production capacity was 10,000 units a month, initially, which is expected to go up right? By the end of the year, you had said 30,000-40,000. Could you give us a sense? Are the run rates the same? Was it guided earlier? Or has there been any change? What should we expect?
A: 10,000 is what we have begun with, but next month, hopefully, we should be able to ramp that up to 20,000 and then as we move into January, in a phased manner, it should be going up to 50,000 units.
Q: In terms of monthly retail sales, on a run rate basis, what should we expect over the next many months?
A: This is a rising curve. It's not an easy question to answer, what precisely would be rate? But as the adjustable market is reached and the product is supplied, we expect sales to double in September, because that is a very near-term view. And then let's see how it goes in October, November, December.
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But as I said, we are preparing for a 50,000 unit capacity, and obviously, we want to reach that capacity, but precisely, exactly how each month will unfold, there is a season in the middle and then afterwards the season is always a bit subdued. We will see how it goes. But I can say that now to January we should be aiming towards a 50,000 mark.
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