However, what is working for Bajaj Auto is the strong showing of its commercial vehicle (CV) portfolio. New permits in Delhi and an open market in Maharashtra helped the company double its CV sales to 110,000 units in the December quarter. Exports of both CVs and two-wheelers have done well, posting a growth rate of 22-48 per cent over the year-ago period. These are driven by an uptick from new markets and recovery in large traditional markets such as Nigeria. Higher exports helped the company post an overall volume growth of 18 per cent in the December quarter.
Given the increasing proportion of sales in the overall portfolio of the more-profitable three-wheelers, realisations and gross margins (indicates profitability after considering the cost of output sold) were robust in the third quarter. What spoilt the show, however, were higher other expenses, which led to operating profit margins of 19.3 per cent, which was below estimates. The bottom line, too, was lower than estimates, given lower other income on the back of a mark-to-market loss on its investment portfolio due to rising bond yields.
To stem the slide and improve volumes as well as market share in the motorcycles segment, the company launched a slew of bikes in January, 2018. These launches include the New Discover 110 and Discover 125 and the new Avengers – Cruise 220 and Street 220. Some of this is reflected in the volumes for January as the company posted 36 per cent domestic growth in motorcycles. Overall growth, including commercial vehicles (CVs), grew 46 per cent year-on-year on a weaker base in January. While 2018 has started on a good note for Bajaj Auto, the street would surely keep an eye on how the trend develops in the coming months.