Bajaj Auto steadies as Chetak deliveries resume; exports offset July domestic softness

How does the rare earth magnet supply recovery change Bajaj Auto’s EV delivery timeline and what does it signal for festive season availability in India?

Bajaj Auto Limited, India’s most valuable two- and three-wheeler manufacturer, confirmed that supplies of its Chetak electric scooter have restarted across dealerships following the successful resolution of a critical supply chain constraint. The company secured fresh shipments of rare earth magnets, a vital component for electric drive motors, enabling production to restart on August 20. By normalizing operations before India’s peak festive buying season, Bajaj Auto has reassured both customers and investors that Chetak deliveries will continue uninterrupted through the remainder of the year.

The announcement was closely watched in financial markets. Shares of Bajaj Auto traded in a narrow band, ending marginally higher at ₹8,685 on August 22, 2025, with a market capitalization of ₹2.42 trillion. The stability in the share price reflected a cautious but steady institutional sentiment. Analysts described the restart as timely and confidence-building, particularly given that bookings had accumulated during July when supply disruptions moderated deliveries.

Bajaj Auto’s Urbanite Business Unit, responsible for the Chetak brand, emphasized that deliveries against existing bookings have already commenced and that production is scaling to meet rising demand without compromising quality. The company reiterated that Chetak ended FY25 as the number one electric scooter brand in India, with its market share doubling since April 2024. For the manufacturer, the challenge has shifted from managing supply bottlenecks to ensuring sustained delivery momentum during a season when consumer demand typically accelerates.

What does the July 2025 sales mix reveal about domestic weakness versus export resilience across two-wheelers and commercial vehicles for Bajaj Auto?

The July 2025 sales report highlighted a mixed picture. Total sales of 366,000 units reflected a modest 3 percent year-on-year increase, but beneath that headline growth was a sharp divergence between domestic and export performance.

In the Indian market, volumes remained under pressure. Domestic two-wheeler sales declined 18 percent to 139,279 units compared to July 2024, while commercial vehicles in India rose slightly by 4 percent to 43,864 units. The weakness was most pronounced in commuter motorcycles, where affordability concerns and uneven rural consumption weighed on demand.

Exports, however, provided the upside. Two-wheeler exports climbed 22 percent year on year to 156,968 units, while commercial vehicle exports surged 79 percent to 25,889 units. Combined, exports for the month rose 28 percent, offsetting much of the domestic decline.

Year-to-date sales for April to July 2025 reinforced this divergence. Bajaj Auto’s exports rose 19 percent to 659,286 units, while domestic volumes contracted 9 percent to 817,951 units. For the first four months of FY26, total sales stood at 1.48 million units, up 1 percent compared to the same period in FY25.

For institutional investors, the takeaway was straightforward: Bajaj Auto’s global footprint continues to act as a hedge against domestic softness. With two out of three motorcycles exported carrying a Bajaj badge, the company benefits from geographic diversification, allowing overseas markets in Africa, Latin America, and South Asia to smooth earnings even when Indian consumption cycles falter.

Where does Chetak stand against Ola Electric, TVS iQube and Ather Energy on market share, and what do Vahan registration trends say about competition?

The return of Chetak deliveries comes at a pivotal time for India’s electric scooter market, which has become one of the most contested spaces in the two-wheeler sector. Bajaj Auto has positioned Chetak as a premium yet practical alternative, competing directly with Ola Electric, TVS Motor Company’s iQube, and Ather Energy.

Market registration data for July and August suggests a fluid competition. TVS Motor has often led monthly volumes, driven by its broad retail footprint and consistent supply. Ola Electric, once dominant, has seen its market share fluctuate as it balances growth with a push toward profitability. Ather Energy has narrowed the gap with new model launches and expanded retail partnerships. Bajaj Auto, while impacted by supply constraints in July, reaffirmed that Chetak closed FY25 as India’s top electric scooter brand by market share, and it intends to build on that position with restored production.

Industry analysts caution that monthly registration shares can swing sharply due to supply chain friction, promotional campaigns, and regulatory approvals. However, with magnets now secured, Bajaj Auto is expected to stabilize deliveries. If sustained into September and October, the festive quarter could lock in pending bookings, convert demand into realized sales, and consolidate its leadership in the EV space.

How does the global rare earth magnet concentration in China expose EV makers to supply risk, and what hedges could Bajaj Auto deploy in FY26?

Rare earth magnets, particularly neodymium-iron-boron variants, are critical for traction motors in electric vehicles. Although they represent a small fraction of the overall cost structure, their strategic importance is magnified by supply chain concentration. Industry data shows that China dominates rare earth mining, processing, and magnet fabrication, accounting for more than three-quarters of global supply.

This concentration exposes manufacturers worldwide to the risk of supply shocks. Export controls, licensing delays, or geopolitical shifts can ripple through production schedules, as witnessed in July when multiple Indian EV makers flagged shortages. Bajaj Auto’s resolution of its magnet supply underscores both the vulnerability and the resilience of OEMs navigating these dynamics.

Looking ahead, Bajaj Auto is expected to pursue hedges such as dual-sourcing beyond a single geography, entering long-dated supply contracts with inventory buffers, and exploring motor designs that reduce dependence on specific magnet types. India’s production-linked incentive programs for local EV supply chains may also provide a medium-term cushion, but for now, the company’s priority is ensuring uninterrupted deliveries through FY26.

What are institutional investors pricing into Bajaj Auto’s valuation relative to Nifty Auto, and how do policy signals like proposed GST cuts reshape sentiment?

Bajaj Auto’s shares trade at a price-to-earnings ratio of 28.5, broadly aligned with the Nifty Auto index, which has rallied in recent weeks on policy chatter around potential Goods and Services Tax cuts for small cars and vehicles. The auto index touched multi-month highs earlier in August before easing, reflecting both optimism and caution around policy-driven demand support.

Against this backdrop, Bajaj Auto’s stock has been range-bound following the Chetak announcement. Investors are weighing three key factors: the trajectory of domestic two-wheeler demand, the sustainability of export-led growth, and the EV delivery cadence now that magnets are flowing again.

Institutional flows suggest a neutral to cautiously positive stance. Funds remain hesitant to re-rate the stock without clear evidence of sequential revenue growth in the second quarter, but long-term investors continue to highlight Bajaj Auto’s strong balance sheet, leadership in exports, and growing EV presence as reasons to hold or accumulate on dips.

What should investors watch in the next two quarters as production normalizes and exports stay firm, including risks, catalysts and execution checkpoints?

The festive season will serve as the first real test of Bajaj Auto’s restored supply chain. Converting Chetak’s order book into actual deliveries in September and October will be critical. Market observers will closely track registration data for signs of accelerated EV uptake.

Domestically, the challenge remains the commuter two-wheeler segment, where demand is tied to rural incomes and affordability. A sustained decline in this segment could dampen total volumes even if exports remain robust. On the export front, Bajaj Auto’s strong performance in July and year-to-date provides confidence, but global demand cycles and currency movements remain variables.

Policy support could act as a catalyst. Any formal move on GST rationalization or state-level EV subsidies would further strengthen demand, particularly for entry-level two-wheelers and electric scooters. Conversely, prolonged global supply chain risks around rare earth magnets or aggressive discounting by rivals could challenge margins.

How are experts and institutional investors interpreting Bajaj Auto’s Chetak recovery and what does sentiment suggest for festive quarter performance?

From an expert lens, Bajaj Auto’s handling of the magnet shortage has turned a potential liability into a confidence-building moment. By resuming deliveries ahead of schedule and before the festive season, the company has repositioned itself as a reliable leader in the EV scooter segment.

Export resilience underscores the depth of Bajaj Auto’s global business model, giving it a cushion that many domestic competitors lack. Institutional investors are likely to maintain a neutral to positive stance, with a bias toward accumulation if the festive quarter shows tangible sales acceleration. The risks are real—another supply disruption, uneven domestic demand recovery, or intensified competition—but the balance of probabilities now tilts in Bajaj Auto’s favor.