Bajaj Auto, one of the leading two-wheeler makers in India, is planning to enter 12 new export markets by 2016 first quarter end.
Bajaj has reported a decline in export volume in the last few months because of political and economic uncertainties in some of its export markets, particularly in oil-producing emerging markets. Bajaj plans to maintain its leadership in the export market by expanding into newer markets — a plan that some analysts are skeptical about given the current stress on emerging market economies and their currencies.
Rakesh Sharma, president of international business at Bajaj Auto, said: “The company is executing an aggressive expansion plan to get into newer countries. This, coupled with the recent market share gains, will hold the firm in good stead and minimize the impact of any macroeconomic headwinds. This will help the firm report a growth of 13-15% in export volumes over the next 3-4 years.”
Bajaj’s motorcycles exports dropped 3.7% to 1.04 million units from a year earlier, according to Society of Indian Automobile Manufacturers or Siam. Even in December, exports fell 12% to 145,000 units, Bajaj said in a statement on 4 January.
Other factors are shortage of foreign exchange and currency devaluation in emerging markets such as Egypt and Nigeria in Africa. Africa accounts for 45% of Bajaj Auto’s total exports. A fall in commodity prices has led to a lower inflow of foreign currency into these markets, which in turn are preventing dealers from stocking up.
The value of the currency in a number of these markets has also fallen sharply. Currencies in Argentina, Mexico, Columbia—some of the key markets for Bajaj—have fallen by 32%, 11%, 18%, respectively.
He also added: “Whatever work we have done in the past years in terms of building the channel and after sales and service is paying off now, Bajaj Auto has managed to retain the retail price in these markets to a great extent despite weakness in the currencies.”
The Indian rupee has weakened 5.5% against the dollar in the nine months to December.
Three months back, the management had guided for a 2 million export volume targets for fiscal 2016. Given the current macro-economic scenario, they won’t be able to do more than 1.8 million units. While the March quarter may look good for the company because of a low base from last year, in absolute sense, the volumes are unlikely to advance.
