Pulsar, KTM, Husqvarna, Dominar: Production Losses Affect Popular Models
Exports Contributes More Than 50% of Bajaj Auto Sales
Global Semiconductor Shortage Keeps Disrupting Automotive Supply Chains
Bajaj Auto, India’s third-largest two-wheeler maker, said an ongoing shortage of semiconductors had led to production cuts across several models, weighing on its export volumes. During the July-September quarter, the Pune-based company lost as much as half of its planned production, a senior company official said.
Impact on Production & Sales
Such a shortage has significantly hampered manufacturing of popular models such as Pulsar, KTM, Husqvarna, and Dominar.
Sales for October at home dropped by 26 %, meaning they sold 198,738 units less of the same period last year.
79 countries with nearly 56% of two-wheeler exports of Bajaj Auto including regions such as Latin America, Africa, the Middle East, ASEAN and Europe.
Issues & Market Conditions
In an interaction with Moneycontrol, Rakesh Sharma, Executive Director of Bajaj Auto, said the supply chain is volatile and added:
“In Q2FY22 we lost 50% of our Pulsar, KTM, Husqvarna and Dominar volumes due to the semiconductor shortage. But does that mean as many lost sales? Not necessarily.”
Demand for two-wheelers in general continues to be weak, even in the festive period, which is also casting a shadow over the business environment.
Overall, wholesale volumes of two-wheelers grew 9% during the April-September period, but these increases must be taken with a pinch of salt given compared with the same period last year when lockdowns made business difficult.
Chip Supply Remains Uncertain
When I brought up whether semiconductor availability was improving, Sharma stressed how uncertain the situation was:
“You think that supplies must be improving, but actually the problem comes back again. We’ve got companies that are ramping up their semiconductor demand such as Tesla, and that kind of has a knock-on effect with us.” This supply variation will last for some time.”
Looking Ahead
Baja Auto, who has much exposure domestically, will need to strike a balance in semiconductor supply with demand both in domestic and international markets. The global chip crisis also continues to be a matter of concern not just for Bajaj but for the entire car manufacturing sector as well.
Given how continued semiconductor shortage is impacting the automotive sector, Bajaj Auto and OEMs at large will have brace for an ongoing volatility in supply in the near term.
