Bajaj Auto’s Managing Director Rajiv Bajaj says exports have bounced back strongly and could soon hit their pre-COVID peak of 200,000 units per month.
With markets like LATAM showing solid growth and only Nigeria remaining weak, he believes the company is well-positioned to regain lost ground globally. July export volumes stood at around 180,000 units, up sharply from earlier months.
Meanwhile, Bajaj says the rare earth magnet crisis has been largely managed through sourcing of low rare earth (LRE) magnets from China. Thanks to fast-paced R&D and motor redesign, both the Chetak electric scooter and GoGo three-wheeler are now being produced with LRE magnets.
He expects Chetak volumes to reach 40,000 units in September alone, supported by rising festive demand and a planned capacity increase to 60,000 units per month.This is the edited excerpt of the interview.
Q: Let me start by asking about the US tariffs. With an additional 25% penalty set to take effect in 21 days—raising the total tariff to 50% if no resolution is found—how damaging could this be for the Indian industry as a whole?
A: I don’t know about the industry, because every company situation is specific to itself. For Bajaj, I can tell you in a word that we are quite unconcerned and I will tell you why. Our exports to the US are basically in two brands, KTM, that’s about 10,000 vehicles a year, and Triumph, which is about 5,000 vehicles a year. Firstly, it is 15,000 vehicles a year in a volume of about 5 million vehicles. So that’s less than half percent as far as volume is concerned. Nevertheless, it’s an important market. It’s very profitable market so it’s not a business we would like to lose. And I don’t think we are going to lose this business, and I will tell you why.
In any case, from around this time from August, September onwards, exports to such markets, including the US, do dip because goods will only reach there by November or so, by which time the winter sets in, and demand turns down significantly.
In any case, the next three four months are the weakest months as far as exports to such advanced markets are concerned, which means we have time to rejig the supply chain until almost December or January, when we will start again exports for the spring and summer season. Therefore, we have many options. Whether we continue exporting from India because there is a rethought on the tariff, or whether we go via facilities that are in Europe or in Asia, such as Thailand or somewhere in LATAM there are many possibilities. So, we are not impacted significantly, and we are not concerned
Read Here | Bajaj Auto unfazed by US tariffs, eyes stronger EV ramp-up: Rajiv Bajaj
Q: I would also like to ask you about how the global tariff situation is impacting your exports. Do you expect a hit in FY26 because of the sentiments and the uncertainty globally?
A: Not really, I would say I don’t see any impact. Post-COVID, once our export markets started recovering, particularly in Africa and LATAM, exports, came back to a level of about 140,000 a month, compared to about 200,000 a month pre-COVID. And as you may have seen in recent months, they have come out nicely to a level of 180,000 a month, with the all-around secular recovery, and particularly so in LATAM, which we are very happy about, because, again, with Pulsar’s and Dominar, it’s a very rewarding market for us.
The single sore point that remains is Nigeria that used to average 50,000 motorcycles a month, and is still hovering around 15,000-20,000 so with the exception of Nigeria for motorcycles, and some markets like Egypt for three-wheelers, where three-wheelers are now currently banned, our export markets have come back strongly. I am quite hopeful that if this trend continues, it may not be long before we are back to that level of 200,000 a month
Q: Just to speak about the rare earth magnet crisis in April this year, you had said India’s EV industry could come to a grinding halt due to the rare earth magnet restrictions by China. What would be your Outlook now, as China has not lifted the restrictions for India still,
A: That is still a very, very uncertain situation I must say this. Every day is a new day again. It’s a very company specific situation. For us, as you are aware that in the first quarter of this calendar year, the Chetak became the market leader in the electric scooter segment. In the recent quarter one of this financial year, our electric three-wheeler, the GoGo, became the market leader in that segment. What I am trying to say here is that our volumes are quite high. We would like to do 30,000 Chetak a month, and in excess of 10,000 electric three-wheeler a month.
For a high-volume player, there is a big impact, because we don’t carry the kind of inventory in number of weeks or months that a low volume player would, and therefore, the immediate solution that seems to be working for us now is to get low rare earth or LRE as it is, called, magnets from China, that has started up. The next step would be to try and source LRE from elsewhere. Because what if China bans LRE tomorrow then you are back to square one. So where else in the world can we source these from? Finally, I think all of us are working towards ferrite magnets, or solutions that have no rare earth at all. So I think that is the road map ahead of us.”
Q: What has been the cost implication of this to get low rare earth magnets? Have you had to do re-engineering?
A: Yes, of course, you have to change, incorporate certain changes in fundamentally your motor design to be able to operate at temperatures that are conducive to maintain performance, to maintain reliability with low rare earth. So fortunately, the R&D is really been working through the day and night on this for the last several weeks, and they have solutions in place for both the Chetak and the GoGo. And therefore, even as we speak, we are producing now with the low rare earth magnets.
Q: To what extent is the rare earth magnet crisis impacting your deliveries? In quarter one of FY26 – what was the impact in percentage terms, and what is the kind of impact you expect in quarter two?
A: As things stand today, I must again say this is a very uncertain situation, and tomorrow I could have a different answer. As things stand today, first of all, in quarter one, we had almost no impact, because the inventory that we were carrying between ourselves and our suppliers has seen us through in quarter one largely. For the whole year also, I think we will not have impact.
More specifically, in July, with The Chetak, we were at about 50% with the three-wheeler, we made it to about 90% I think we made 8,000 of the GoGo electric three-wheeler. I had said a couple of weeks back that I see a zero-production month in August as far as electric vehicles are concerned. But I am happy to say that, as I just mentioned, things have changed a lot in the last two weeks with the availability of LRE, we are now looking at least a 50% availability, as far as the Chetak is concerned, in this month in August, and perhaps about 70% as far as the GoGo is concerned things stand today.
For the month of September, we should post our highest numbers ever again, as things stand today. But we will still fall short of demand only because demand is really high next month anticipated to be very high because of the festive season. So today, if I have to hazard a guess, I would say something like 40,000 electric scooters, that is the Chetak, and well over 10,000 of the GoGo electric three-wheeler in September is not out of the question, if the LRE magnet supply continues as it is continuing today.
Q: If we were to ask you about the full fiscal, would you trim the production outlook or you would say you will remain on track despite the crisis?
A: Neither of those two, I will say that we think we can now do better than we had even planned for the whole year, because by October, production should completely normalise. We should have made up for what we have lost in July and what we will lose in August. And in fact, the reception is so good as I said, both these brands are market leaders in their segments. In fact, we will hope to make and sell more in the second half of this financial year than we had anticipated at the beginning of the year.
Q: If I could ask you, what is the kind of overall numbers that you are looking at for the full fiscal in terms of production and the growth over FY25?
A: That’s hard to say, because, again, it’s very, very uncertain. It can get a little hypothetical, but I will tell you this, that in terms of capacity, we have pushed it up to 40,000 for the Chetak and in anticipation of future launches, we are moving it up to 60,000 in the next few months. With the ICE three-wheeler, we are close to 80% share, and that’s certainly our goal, that why shouldn’t we have 80% share in the electric three-wheeler segment as well.
Q: In terms of more launches, what about the EV electric scooter plans? Are we going to see more variants of the Chetak at different price points, electric motorcycles, other EV products?
A: A bit of everything actually. As far as the scooter segment is concerned, we exited the ICE segment nearly 20 years back. This is a segment in which we had a fresh start. So we started with the new avatar of Chetak, the electric. I think, to answer your question, various SKUs of this platform at various price points, that has been done, quite effectively, which is why we acquired leadership. Of course, more of the same will continue to happen, but we need to launch a new platform, which, quite frankly, we would have launched in this quarter. We have deferred that now to quarter three possibly even quarter four as in January. It all depends on the availability of magnets, because as long as there is some constraint, we want to keep making more of what is obviously currently selling before we introduce a new product and make life even more difficult for ourselves in in terms of additional demand.
As far as three-wheelers are concerned, unlike with the scooter, this is where, as I said, we are 80% share, we are the market leader. We are leveraging that leadership, or we have leveraged that leadership with the GoGo and we are going to take it further.
I anticipate you asking me a question on our E-rickshaw foray and again, we are starting production as we speak. I believe we will go to market in the first four markets on August 10 under the brand ‘Riki’ so that’s going to be our brand for the electric rickshaw segment.
As we are done with the GoGo, we will build it up slowly. We will wait a quarter or two before we scale it up, because, again, we need to get the product absolutely right. We are still making our way up the learning curve in all respects of technology product and customer service, as far as electric technology is concerned. The scale up will be gradual, but we are going to be in the market from this month.
As far as motorcycles are concerned. This is not something that we have talked about so far, but I’m happy to share a first information on this, that this is a segment where it’s a bit between the Chetak and the three-wheeler. It’s not that we are not in the ICE motorcycle. But we are not exactly the market leader, or overwhelmingly the market leader. So what we are going to do here is, we are going to work with two of our strongest brands, the Boxer in export markets and the Pulsar, the world over, quite frankly, is a very strong brand. We are going to work with these two brands, and hopefully in the near future, we will have something on that front eye, on the electric motorcycle as well.
Read Here | Bajaj Auto to launch Riki e-rickshaw brand on August 10, production already started
Q: You are saying you are working with the Boxer brand that is available in African markets and the Pulsar to develop an electric prototype. Is that what you are saying?
A: To develop two electric motorcycle platforms, one each in the Boxer brand and the Pulsar brand as a commuter and a spokes motorcycle.
Q: Are you giving any timeline for that as well?
A: We have just started work, so this will take a little time, but we are not rushed, because we think that it is the scooter that for logical reasons, will have greater traction. Our greater focus is on expanding Chetak both domestically and in the export market, it’s we make a beginning now. And of course, as I said, we need to double the three-wheeler share from here.
Q: In terms of ‘Riki’ the electric rickshaw, you are saying that sales will begin this month. Could you give us any numbers that you are looking at for the for the full fiscal?
A: I won’t know. We start with, like a few 100 vehicles. This is a segment which it is apparently as large as the auto segment itself. So, 40,000-50,000 a month – I don’t know, in a new segment, it is very hard to predict acceptance, and you discover things as you go along. So, I think we start with a few 100 a month, and then maybe in a couple of quarters, Rakesh will be able to give you a clearer picture.
Q: I would also like to ask you about the KTM brand Bajaj Auto is infusing ₹7,200 crore in reviving the KTM brand. This is one of the biggest investments that Bajaj Auto has made in many years. Why do you think this is so important for the group’s future?
A: Fundamentally, while it may appear that a motorcycle is a motorcycle is a motorcycle, there are two worlds of motorcycles out there. There is one world of the volume brands, such as Honda, Yamaha, Enfield, TVS, Bajaj, etc. and this is roughly an industry size of 50 million vehicles. Of course, moped scooters, step-through motorcycles all put together. This is, let us say, the mass of the volume space. And then there is the more premium or lifestyle space that’s more dominated, I would say, by brands, Western brands such as, let us say KTM, Triumph, Ducati, BMW, Harley these are the better known ones. And this is an annual industry size of a little under 1 million a year. So it’s 50 million here. It’s 1 million there and quite frankly, these are very different businesses, different business models, obviously, because the scale is very different.
The levers of brand, technology, quality, cost, distribution, work very differently in these two spaces. We have always been of the belief the last 20 years that while the Bajaj brand is very appropriate, very competitive in the first world of 50 million vehicles, where we have a lot of headroom to grow, because we are under 5 million in an industry size of 50 million worldwide. But however, we have the humility to understand that our brand is not going to carry over effectively in terms of pricing power, let us say in the second world of the premium or the lifestyle products. And that’s where the association with the KTM and Triumph is really invaluable for us.
And that’s fundamentally the reason why it was necessary for Bajaj to step in when it became necessary because of this crisis that came upon KTM to keep this brand going, to keep this operation going. Because even for us, from a business point of view, it’s a significant revenue and a significant contribution to our bottom line.
Q: That’s an important statement. I am sure that investors would also be wanting to hear. Now that you have decided to invest so much money in the KTM brand, how would you like to now scale it up, considering that Bajaj Auto is now fully in the driver’s seat with the KTM.
A: Scale is not the most important thing for KTM. In this world of motorcycles, as I mentioned, the industry size is about 800,000 a year. Market Shares don’t move by much. The qualitative metrics are more important here. We have obviously been grappling with this issue for the last six months. We have had some very good meetings with our counterparts at KTM. The entire, almost the entire, senior management team was here last week for two days. And I can tell you that the road map ahead rest fundamentally on these two thoughts. First, we have to restore the brand. As unfortunately happens sometimes with success, you tend to diffuse the brand by extending it into too many categories, too many segments, even beyond the core segment.
The second thing that that then leads to the brand diffusion leads to is this proliferation of SKUs that makes the business very complex, right from R&D to the dealer workshop. First, in my opinion, we have to restore the brand to the core, and from that will follow a great simplification of the operations, which will have a very salutary effect on the company.
The second thing we have to do is to reset the cost. To put it very simply and bluntly, European manufacturing is dead. The auto industry, including the car industry, understands that now they would have the political, social and other compulsions, why they cannot move everything out of Europe to somewhere in Asia to produce more competitively. But let me give you an example of Triumph. Mr. Bloor, moved 100% of Triumph production to Thailand over 15 years ago. Every single Triumph motorcycle that is made today is made either in Thailand and, of course, more recently, in India. If Triumph can do this 15 year back in principle why not KTM.
We have never shared this specifically before, but let me tell you that while KTM struggles in Europe, the KTMs that we make and export out of India to different parts of the world, bring us EBITDA margin of over 30%. And the main reason for that is the great cost competitiveness that India and the Indian supply chain and our excellent suppliers offer. We have to reset the cost of KTM. We have to restore the brand. And if you are able to do this effectively, then I think KTM is a very bright future.
Read Here | Rajiv Bajaj says resetting KTM’s cost structure key to brand revival
Q: What does this also mean in terms of revival of KTM exports?
A: KTM exports, well before this disruption, you would know that our exports of KTM motorcycles worldwide were of the order of about 15,000-20,000 a month. As I said, very profitable. In the January, February, March quarter, this fell to zero. So it reduced progressively as they found themselves in trouble from the middle of last year. In the first quarter of this calendar year, I think we exported nothing.
In quarter one if I am not wrong, we are back to 14,000 or so. I would say the lower end of the normal. And I am quite hopeful that as we move forward, for two reasons, we should do even better. One because KTM is step by step, every week getting stronger, which means dealers, distributors, etc. things are normalising. Secondly, perhaps you are aware that in terms of the new Duke, the new Adventure, the new Enduro and Supermoto, we just started up with several new products, so that will bring us additional business as well. So, the short story is that KTM exports may well hit a new high, of course, subject to the Trump tariffs.
Q: I would also like to ask you about the possibility of launching a twin cylinder bike. I think you had teased this in an interview to us a few years ago. What’s the status of that?
A: You are right, I mentioned it to you. In our industry, there is no maxim, no principle, that is more true than this, that there is no replacement for displacement. So, yes, we are working on such a motorcycle characterised by being bigger in displacement, by being a twin and really having a lot of new technology, a lot of cutting-edge stuff on. It still work in process, I think still about a year or so away. It takes time, but certainly we will be out with that.
Q: This will be the biggest Bajaj Auto product till now, bigger than any of the KTM bikes, bigger than the Pulsar?
A: Biggest, the fastest, the sharpest, the smartest, I think it will set a new benchmark.
Q: What about another CNG motorcycle? Your Freedom sales have been adding volumes to the brand?
A: The Freedom has been a little disappointing. But the good news is that most of the sale is concentrated in a very few geographies, such as pockets of Maharashtra, Gujarat, Delhi, up, etc. where the availability of CNG, or the perception of availability of CNG in terms of number of locations, in terms of the pressure at the pump, in terms of a reasonable waiting period at the pump, etc. is positive. So, more than anything, this is about, changing people’s habits. And at the same time, the other factor that’s standing in the way a little bit is just the sheer economics of it.
The three wheeler industry is now 70% CNG, if I am if I remember, right. But that is because that vehicle applies for 100 to 200 kilometres a day. Typically, a motorcycle rider is not averaging that kind of mileage, and therefore for him, the economics is not so favourable, so compelling, specially because CNG rates also have gone up a little bit in recent times. So, this is taking off a little slower than we had expected, but still, we are very proud of the fact that, as an Indian company, as a mark of innovation and engineering, we have given the world its first CNG two-wheeler. We would like to first build this brand further before we introduce any new CNG motor side.
Q: In terms of strengthening measures to recover market share in the 125cc plus segment, how has that fed so far in quarter one and any more actions that we see?
A: I will be very candid in saying this that, on the one hand, I think we have done very good work as far as product is concerned. As you may be aware, in this month, we have launched the new Triumph Thruxton. Soon, the Triumph Tracker will come to market, if I am not wrong, by October or so. Great works been done on the Chetak front, on the three-wheeler front, including the electric three-wheeler and Riki the electric rickshaw. Having said that, we have also failed somewhere and we should be honest about that.
We have failed a little bit with the Pulsar. When you speak of the 125cc plus segment I believe you are referring to our domestic motorcycle performance. Pulsar is a very, very strong brand. It’s ₹15,000 crore brand for us annually. It’s a brand that in the domestic market, even now, from 125 to 400cc clocks, about 100,000 vehicles a month. When the brand is fundamentally strong, the primary reason for it to lose some space, some traction in the marketplace can only be that it’s at the end of its life cycle, which is the case with the Pulsar.
We need to see some new product in there, and I am happy to share with you that starting October, that will happen in quite a significant way. Then every quarter, we have something exciting in the Pulsar brand for our customers. And I am sure that little bit of share that we have lost, which we don’t like at all, because Pulsar is really the mainstay of the company, especially in the domestic market I am sure it will come back quite quickly, because that’s how you know strong brands behave.
Read Here | Bajaj Auto begins work on electric motorcycles; Boxer for commute, Pulsar for sports
Q: As we leave, you could you give us a sense of your outlook, certain focus areas and challenges that you see in the industry in the near term?
A: I would be repeating myself, but I will say this, that a domestic motorcycle portfolio, the single point of focus is Pulsar in the export markets, it is the Boxer 125 in some markets of Africa that we have trailed a little bit. These two, the Pulsar in India and the Boxer in Africa, will be our focus areas through the rest of this fiscal.
KTM, of course, we have a big job to do at matting off and in Austria, but otherwise, KTM and Triumph out of India are doing well. Chetak, I said to you that we are expanding capacity, introducing second platform soon. And on another three-wheeler, touch wood I am grateful. Things couldn’t be better with the ICE or the electric three-wheeler. And you have to give us your good wishes for the Riki.
Q: One more question that I am getting, that you are looking to launch a new bike in the 150cc segment. Could you give us a timeline for that? And would this be under the Pulsar brand?
A: I don’t know what you are referring to. To the best of my knowledge, there is no new Pulsar, unless Joe and Rakesh are up to something I am not aware of. But yes, there is a new 160cc in the KTM brand. KTM has a 200cc, 250 and a 400 in the Duke and RC product brands. But we have, so far, I don’t know why we have been missing the obvious, which is the 150-160 segment. And I think again, that is something that we have just started production of, and that’s yet another reason why I feel very confident about KTM, both in terms of domestic sales and exports.