Bajaj Auto Accelerates Into The Future On Record Earnings
Indian automotive giant Bajaj Auto is decisively stepping on the accelerator, unveiling ambitious plans for its electric vehicle division and the acquisition of KTM. This strategic shift comes on the back of an exceptionally strong financial performance, where the company reported a staggering 53% year-on-year surge in net profit, reaching ₹2,122 crore for the quarter ending in September.
Driving this profit explosion was a 20% increase in revenue, which climbed to ₹16,310 crore. This impressive growth was largely fueled by robust international sales and a rising consumer appetite for premium motorcycles, particularly those with engines above the 125cc range.
Electric Ambitions: A New Chetak Platform and Supply Chain Solutions
Despite facing a significant production hurdle in July and August due to a shortage of rare earth magnets for its EVs, the company has swiftly navigated the challenge. Rakesh Sharma, Executive Director of Bajaj Auto, confirmed during the post-earnings call that the issue has been resolved by switching to light rare earth magnets.
Sharma announced that the company will "double down" on its electric business. The cornerstone of this aggressive push is the launch of a completely new platform for the Chetak brand within the next couple of months. Additionally, Bajaj is planning more launches in the electric three-wheeler segment.
Learning from the recent supply chain disruption, the company is also proactively exploring ferrite magnet-based solutions. This move is aimed at reducing its dependency on heavy rare earth magnets, a vulnerability that had forced Bajaj to produce only about half of its planned electric vehicles during the two-month period.
International Strength and the KTM Integration
The quarterly results highlighted a tale of two markets for Bajaj. While domestic two-wheeler sales saw a 6% decline to 596,576 units, international sales soared by 19% to 472,411 units. Sharma highlighted that this international revenue surged by an impressive 35%, with regions beyond Africa contributing significantly to the growth.
Concurrently, Bajaj Auto is fast-tracking its takeover of the Austrian premium motorcycle maker, KTM. The company has secured eight out of the nine necessary approvals and expects to complete the acquisition process, bringing KTM fully under its control by the end of this month.
With full ownership imminent, Bajaj is preparing a comprehensive revival plan for KTM. The strategy focuses on cost-reduction, introducing new management, and revving up exports to boost KTM's presence in international premium markets and increase its share in the domestic Indian market.
This robust performance from Bajaj, the country's fourth-largest two-wheeler maker, follows a strong showing from TVS Motor Co., which also reported significant growth. As the industry landscape evolves, Bajaj Auto's dual thrust on electric mobility and premium global brands like KTM marks a pivotal gear shift in its long-term strategy.
