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Bajaj 1HFY00 sales - mopeds impress, scooters depress - Views on News from Equitymaster
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  • Oct 7, 1999

    Bajaj 1HFY00 sales - mopeds impress, scooters depress

    Bajaj Auto (Bajaj) has posted mixed results as far as its scooters, motorcycles and moped sales are concerned. This was revealed by sales figures for the period April-September 1999 released by the company.

    Bajaj Auto is India's largest manufacturer of two/three-wheelers with a presence in all three segments of the two-wheeler market - scooters (65% market share in September 1999), motorcycles (26% market share) and mopeds (8% market share).

    Bajaj's scooter sales in September have plunged 17.4% (year on year), while cumulative sales in 1HFY00 have declined by 14.8%. However, moped sales were a revelation, with an impressive 84.7% rise in September, while cumulative sales over the period April-September 1999 were up 11.1%. Even motorcycles sales (Japanese) continued to grow at a healthy rate of 28.2% in September, while 1HFY00 sales were higher by 19.4%.

    With the sole exception of mopeds, Bajaj's sales performance in September seems to be a repeat of the previous months' performances. Mopeds sales have been encouraging largely due to a positive response to Spirit. Bajaj's moped market share has improved from 6% in July 1999 to 8% in September. If it continues in the same vein, it could acquire double-digit market share by March 2000.

    Even Bajaj's Japanese motorcycle sales have clocked a robust growth rate, thanks to the strong demand undercurrent in motorcycles. However, its Indian motorcycles (M-80) have not performed as well as its Japanese counterparts.

    But impressive performances by mopeds and motorcycles have come against a backdrop of a sales decline in scooters, which continues to be a matter of concern for the company. The only consolation for Bajaj is that it is not the only company that is affected by a decline in scooter demand. Others like LML and Kinetic Honda have fared little better.

    Bajaj's sales performance so far, underscores the importance of mopeds and motorcycles in its strategy over the next few months. Having got a grip on mopeds, it will now seek to consolidate its position in this segment and will challenge market leaders TVS Suzuki and Kinetic Engineering for market share. Although it has sustained market share in motorcycles, it is too premature to comment on whether it has or will grab market share from Hero Honda in the short term. But Bajaj will certainly like to put as much distance as possible between itself and TVS Suzuki (20% market share).

    Bajaj's margins in the short term could come under pressure as it tries to comply with the strict emission norms for 2-3 wheelers. In view of the competitive nature of the two wheeler market, it may not want to pass on the entire incremental cost to consumers.

    Market view:
    Analysts have forecasted a stabilising scooter market and find Bajaj's new range of products very promising. They have flagged a ''BUY'' on the company's stock.



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    Aug 23, 2017 (Close)


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