Bajaj Auto feels that the move towards electrification is going to re-energise the two-wheeler industry. Speaking at our sister publication Autocar Professional’s Two-Wheeler Conclave, Rakesh Sharma, executive director, Bajaj Auto, said, “The two-wheeler industry is currently at an inflection point. Sometimes, we need discontinuation to reinvent the industry. The move to electrification is a good way to reinvent the wheel. It will help reconnect with the customer even more powerfully. Also, this is a global opportunity for India.”
- Electrification will require industry to do things differently
- Tax cuts needed to revive declining two-wheeler sector
- Supply shortages will take almost a year to resolve
Sharma mentioned that like Bajaj Auto, everyone is preparing for the EV storm and its imminent landfall. Bajaj will also be setting up a 100 percent subsidiary for its electric business. “It is like a new business, and we are not paranoid about the volume. We have plans to enter more cities,” he said.
Since 2019, the two-wheeler sector has been declining for one reason or the other. “The two-wheeler industry is a good indicator of the demand at the bottom of the pyramid. Two-wheelers are essential products and their growth has a multiplier effect on people and the economy. Right now, the demand is in the negative and COVID-19 has surely impacted. The festive season has shown some positive signs, but it is still below expectations. We expect demand to pick up in the second half of the season,” he pointed out.
Sharma also stated that recognising two-wheelers and four-wheelers as different product categories under GST could help revive demand. “The four-wheeler demand has behaved differently. The demand-price elasticity is different for a two-wheeler.”
According to him, if there is a move to offer relief on the purchase side and income taxes, and if there are steps to put more money in the pockets of middle-class consumers, it could help drive the demand in India. “Demand is strongest in the mid-level motorcycles," the executive director explained.
He highlighted the “need to be prepared for the long haul”, despite the short-term challenges and pointed out that customer service, R&D and manufacturing are the key focus areas in the long term.
In addition to a slump in demand, supply issues, like the semiconductor crisis and shortage of shipping containers, have also plagued the industry. Sharma mentioned that new measures from China may further choke the circulation of containers. “I am bracing myself for it,” he expressed. It should take up to a year for things to get back to normal.
“The whole horizon of managing is now reduced to a quarter, or a month, even for top management. We need to be agile about considering short-term uncertainties and put counter measures into place,” he said.