Trade War Risks Remain Despite Focus on Global South: Rajiv Bajaj

Bajaj Auto’s Global Versatility Amid Challenges

Rajiv Bajaj emphasized Bajaj Auto’s strength in adaptability, underlining that the company remains resilient across segments — electric vehicles (EVs), scooters, motorcycles, domestic markets, exports, and competition with start-ups like Ola and Ather. Bajaj Auto’s ability to pivot effectively has kept it ahead despite evolving global and domestic dynamics. While the company primarily exports to the global South, thus less exposed to US tariff barriers, the growing trade war — particularly China’s threats to restrict exports of rare earths critical for EVs — poses a significant potential risk, especially for its all-electric Chetak scooter line and electric three-wheelers.

Highlights:

• Bajaj Auto exports predominantly to the global South, minimizing US tariff impacts.

• A rare earth export ban by China could significantly impact Bajaj’s EV lineup.

• Bajaj asserts adaptability as the company’s enduring strength against evolving global challenges.

Impact of Global Trade War on Bajaj Auto’s EV Plans

Rajiv Bajaj warned that if China restricts rare earth exports, it could cripple Bajaj’s electric vehicle production, notably the Chetak scooter line, where electric models constitute 100% of output. Around 20% of Bajaj’s three-wheeler production is also electric, making the company vulnerable in the extreme scenario of raw material shortages. While the current immediate impact is limited to minor cost pressures, such as costlier steel due to anti-dumping duties, Bajaj remains cautious about market volatility impacting its profitable export operations, including Triumph motorcycles.

Highlights:

• Chetak scooters and 20% of Bajaj’s three-wheelers depend heavily on rare earths.

• Current effects include costlier steel and potential export market closures.

• China’s move would impact the entire global EV sector, not just Bajaj Auto.

Domestic Market Growth: Regional Surprises and Policy Dependency

Rajiv Bajaj noted that India’s two-wheeler industry has just returned to pre-COVID levels, with urban consumption still muted. However, he highlighted surprising regional growth, especially in Uttar Pradesh, driven by better infrastructure, security, and more women riders. Bajaj refrained from projecting specific growth numbers but stressed that future expansion would be a composite result of global markets and supportive policy frameworks promoting EV adoption.

Highlights:

• Domestic two-wheeler sales are slowly recovering post-COVID.

• Unexpected growth observed in Uttar Pradesh due to improved roads and security.

• Future growth hinges on government policies favoring EV conversion.

Bajaj Auto’s Historical Transitions: A Testament to Adaptability

Reflecting on Bajaj Auto’s evolution, Rajiv Bajaj recalled three major transitions: from scooters to motorcycles, from a domestic-centric company to an exporter to 100 countries, and the ongoing shift from internal combustion engines (ICE) to EVs. Rajiv, who once persuaded his father Rahul Bajaj to pivot toward motorcycles, is focused on enabling Bajaj to become the world’s most versatile motorcycle maker during his new five-year term as Managing Director and CEO.

Highlights:

• Transitioned from scooter dominance to motorcycle leadership in the 1990s.

• Expanded from domestic operations to 100 international markets.

• Currently navigating the transition from ICE vehicles to EVs.

Responding to Start-Up Competition and Market Dynamics

Rajiv Bajaj’s philosophy against start-up challenges like Ola and Ather is rooted in Bajaj’s inherent ability to adapt rather than compete on hype. He dismissed market trends like “premiumisation” as clichés, preferring to call Bajaj’s strategy one of differentiation, choosing focused market segments and excelling within them. Each global market presents unique opportunities, and Bajaj’s goal is to be selectively dominant, not universally expansive.

Highlights:

• Strategy focuses on market and product differentiation, not blind premiumisation.

• Bajaj selects specific segments globally to maximize competitive advantage.

• Adaptability remains Bajaj’s answer to new start-up competition.

Market Share Battles: Bajaj’s Stand Against Rivals

Addressing the recent market share gains by TVS Motor Company, Rajiv Bajaj asserted that Bajaj maintains leadership in significant segments like the 125 cc and 400 cc categories. He subtly criticized rivals for focusing on lower-margin segments where Bajaj deliberately chooses not to compete, aligning this approach with a strategy of maintaining healthy profit margins.

Highlights:

• Bajaj holds leadership in high-margin motorcycle segments.

• Avoids competing in low-margin scooter categories intentionally.

• Margin targets are a consequence of selective segment leadership, not an upfront goal.

Financial Strategy: Focus on Long-Term Experimentation

Rajiv highlighted that Bajaj Auto maintains strong EBITDA margins around 21–22%, setting aside about 1–2% for experimentation. This ensures that an entrepreneurial spirit thrives within the legacy business structure. Quoting Mark Twain, Rajiv emphasized the importance of fostering entrepreneurship without being rigidly constrained by business norms.

Highlights:

• Bajaj Auto maintains 21–22% EBITDA margins consistently.

• Allocates a small share of resources for ongoing innovation experiments.

• Entrepreneurship culture prioritized alongside profitability.

India’s Regulatory Framework: A Key Enabler

Praising India’s progressive regulatory environment, Rajiv Bajaj stated that Indian emission and safety regulations are among the world’s best. Bajaj Auto benefits from these standards to produce motorcycles competitive in Europe and other advanced markets. He proudly noted that India’s two-wheeler safety regulations even surpass European norms in certain aspects.

Highlights:

• Indian emission and safety norms align with or exceed global standards.

• Bajaj Auto’s products are competitive in strict regulatory markets like Europe.

• Regulations have played a vital role in strengthening India’s two-wheeler industry.

Bajaj’s Three-Wheeler Leadership and Future Growth Plans

Rajiv Bajaj reaffirmed Bajaj Auto’s global leadership in the three-wheeler segment, pointing out the surging demand for their electric variants. He also hinted at an imminent entry into the electric rickshaw (e-rick) segment, signaling further EV expansion. Additionally, Bajaj is working on a confidential global partnership opportunity in a brand space adjacent to its core offerings, hinting at strategic growth beyond traditional models.

Highlights:

• Bajaj Auto leads the global three-wheeler market.

• Electric three-wheeler demand witnessing substantial traction.

• A major global partnership announcement is expected soon.