Bajaj Auto says sales take 25% hit on demonetization

Bajaj Auto on Tuesday said sales are down 25% this month with the rural market suffering a huge impact due to demonetization.

Eric Vas, president - motorcycle business, Bajaj Auto, told DNA Money, “There has been a significant impact in the motorcycle business for us. Many of our customers used to do transactions in cash. They are used to make down-payments in cash even if it is a finance case or buying the bike on cash. There has been a huge impact because now they don’t have the currency notes to transact business.”

He said the issue would sort out itself as RBI puts more currency notes in circulation.

“I don’t think it is possible to shift everything to e-payments. In rural markets, they do not use electronic transactions largely. They are used to transact in currency notes. Dealers also do not have counter sales machines,” Vas said.

He said since rural areas are more impacted than urban areas the products that sell in rural markets are correspondingly more impacted. “For us, 100cc brands have taken a bigger knock because of the rural market turning down,” he said.

On the inventory build-up, Vas said, “We are not building inventories currently. After the festival season ended, our inventories were low, so we were in the process of refilling inventory when the demonetization happened. Obviously, we cut back our dispatches and are working to make sure that sales momentum is not lost.”

Bajaj Auto on Tuesday launched its new version of Bajaj V, the bike that contains the metal of INS Vikrant and a new initiative Invincible Indians.