Bajaj Auto does not see entry-level customers returning "in the near future", its managing director told broadcaster CNBC-TV18 on Monday, signalling a dull festive season for the traditional fuel based-segment as buyers weigh electric options.
"The entry segment, which is the 100cc motorcycle, continues to be under pressure for the industry as a whole," MD Rajiv Bajaj said in an interview to CNBC-TV18.
Buyers at "the bottom of the pyramid" who were hit by the COVID pandemic, job losses and rising petrol price, are not coming back, Bajaj said.
Bajaj Auto has seven motorcycle models in the entry segment between 100 and 125 cc, priced in the range of 67,000 rupees ($805.26) and 107,000 rupees, per the company's website.
Sales of two-wheelers reflect the financial health of India's rural economy and demand in the country's largest consumption segment - the lower and middle-income households - that is battling a sharp rise in food prices due to erratic monsoons.
Bajaj, whose company sells the popular Pulsar range of motorcycles, attributed the waning interest in conventional vehicles to the rapid take up of electric vehicles and said that a "disruptive action" is needed in the space.
Every time someone buys an electric scooter, it comes at the expense of not only internal combustion engine (ICE) scooters but also motorcycles, he said.
Bajaj also proposed that original equipment manufacturers develop compressed natural gas (CNG) two-wheelers alongside tax incentives from the government, hoping that this would "galvanise" entry-level customers.
The proposal comes as the government pushes for two-wheeler EVs to account for 70% of all two-wheeler sales by 2030, from 14% currently.
Bajaj Auto's monthly domestic two-wheeler sales in August slumped 31%, while exports rose 2%. ($1 = 83.2029 Indian rupees) (Reporting by Hritam Mukherjee in Bengaluru; Editing by Dhanya Ann Thoppil)