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Lower demand from major overseas markets for a variety of reasons has led Bajaj Auto to curtail production of two- and three-wheelers at its plant in Aurangabad, and even stop making three-wheelers altogether for some time.
This is a major reversal of the trend seen over the last seven-eight quarters when Bajaj Auto’s exports have steadily grown, boosting its sales numbers at a time when the Pune-based motorcycle major has been losing share on its home turf.
In the third quarter of FY 2014-15total sales were down by 1 per cent but export numbers grew by 16 per cent year-on-year to 4.9 lakh units, and accounted for nearly half of the company’s total income from sales.
In January 2015, overseas sales stood 4 per cent higher when domestic sales were down by 9 per cent.
Global troubleThe expected drop in export numbers in the fourth comes on the heels of demand being hit in major markets like Nigeria, Sri Lanka, Egypt and Bangladesh. In Nigeria, militancy and currency devaluation are believed to have hurt demand.
As for Sri Lanka, the new government has frozen decisions taken by the earlier regime.
To counter the huge inventory pile-up, Bajaj Auto began to slow down production at its plant in Aurangabad from the middle of this month, and has completely shut down production of three-wheelers between February 23 and 28. The company makes most of the motorcycles for export, as well as all its three-wheelers here.
Rajiv Bajaj, MD, Bajaj Auto however remained unfazed by the imminent prospect of a significant drop in exports in the current quarter.
Back and forth
In response to an e-mail , he wrote: “In recent years exports has become a large component of our production.
“Monthly export demand does vary more than domestic does, sometimes due to unrest in a market, sometimes due to trouble at the ports, sometimes due to changes in export policies such as DEPB and sometimes simply due to capacity problems. I have always maintained that this is just a case of demand moving back and forth rather than up and down. What we are witnessing right now is no different, it is all part of business as usual.”
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