At a time when the auto industry is cutting back on production and has cut 3.5 lakh jobs, Bajaj Auto MD Rajiv Bajaj has said that a 5-7 percent drop in retail sales is not a crisis and the industry must look at its own shortcomings before seeking a stimulus from the government.
Taking a strong divergent view from the rest of the industry, he said the drop in retail sales would not have hurt so much if companies had invested in global markets in the last 10-15 years.
“A lot of these companies are not able to export as their products are mediocre. When you make everything from scooters, to bikes, to cars, to jeeps, to SUVs to buses and everything under the sun you will not be world-class at everything”, Bajaj told CNBC-TV18.
Bajaj said that the auto industry, due to its own ignorance built up inventory in September last year and it is these stocks that are now being corrected.
He also said the thousands of job losses were part of “grandstanding” by companies to push the government to bail them out with a stimulus package. “Salaries for Bajaj Auto employees are just four percent of sales. Getting rid of 10 percent of my people would save only 0.4 percent. Is saving 0.4 percent in EBITDA and playing to the galleries on Dalal Street more important than thousands of jobs?” he asked.
“How are we going to build a sense of ownership in our own people if we can’t even cushion a shock for 6-12 months and that too a shock of our own making,” he added.
Former Vice Chairman of the Niti Ayog Arvind Panagariya recently said that with respect to the auto industry the case for a government led rescue is particularly dubious.
“Had the auto industry been genuinely competitive, it could have easily made up for the temporary fall in the domestic demand by diverting sales to the vast export market, which was worth $740 billion in 2017. But with just 0.9% share in this market, Indian auto industry has hardly proved its mettle in the world market”, he said.
BVR Subbu, the former President of Hyundai Motors has said that the industry for long has followed an ostrich like approach and considered wholesale billing as akin to sales.
Rajiv Bajaj said he agrees 100 percent with both Arvind Panagaryia and BVR Subbu. He also reiterated his demand for GST cut in conjunction with BS-VI at least for two and three wheelers. He also said that Bajaj Auto would not push up whole sale numbers at all in this festive season and would focus only on inventory correction.
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