Bajaj Auto to expand annual capacity to over 9 million vehicles after record Q1 performance

Bajaj Auto is set to significantly boost its annual production capacity to over 9 million vehicles, driven by record Q1FY27 financial results, robust export demand, and surging growth in its electric vehicle segments.

Pune-headquartered Bajaj Auto's consolidated net profit for the first quarter (April-June) of financial year 2026-27 (Q1FY27) rose 46 per cent year-on-year (Y-o-Y) to Rs 3,225.63 crore, while revenue increased 65 per cent to Rs 21,688.8 crore.

This strong performance was driven by record vehicle volumes, higher realisations, and broad-based growth across domestic and export markets, internal-combustion and electric vehicles, and two- and three-wheelers.

Sequentially, revenue rose 22 per cent, while net profit declined 12 per cent.

However, the company said the consolidated figures were not comparable with the year-ago and preceding quarters following the acquisition of a controlling interest in Bajaj Auto International Holdings AG (BAIHAG) and the consolidation of its financial results from the current quarter.

The March quarter (Q4FY26) had also included Rs 1,195.21 crore as Bajaj Auto's share of profit from the then associate.

Profitability and Sales Performance

A favourable rupee, improved product mix, operating leverage, pricing actions, and cost savings supported profitability despite sharply higher input costs.

Bajaj Auto reported a 29 per cent Y-o-Y rise in total vehicle sales to a record 1.44 million units during Q1FY27, driven by strong export growth, higher domestic sales, and the rapid expansion of its electric two- and three-wheeler businesses.

Total two-wheeler volumes rose 29 per cent to 1.22 million units, while commercial vehicle sales, comprising primarily three-wheelers, increased 33 per cent to 215,699 units, according to the company's quarterly results release.

Export and Domestic Market Dynamics

Exports were the principal growth driver, rising 54 per cent Y-o-Y to a record 732,173 units and crossing the 700,000 unit mark for the first time in a quarter.

Two-wheeler exports increased 52 per cent to 636,005 units, while commercial vehicle exports grew 69 per cent to 96,168 units.

The company said it continued to gain ground in key international markets, led by another strong performance in Latin America and a recovery in Africa.

African sales more than doubled, with Nigeria recording threefold growth.

Export growth was sustained despite logistical constraints and geopolitical challenges in West Asia and North Africa.

Rakesh Sharma, joint managing director (MD), Bajaj Auto, however, pointed out that it was not an easy quarter.

"We faced raw-material inflation, supply-chain disruptions, and serious logistics issues in international markets.

"Taken together, these affected product availability by 10-15 per cent. With normal availability, our performance would have been better and volumes could probably have crossed the 1.5 million unit mark.

"Nevertheless, we delivered record numbers under the circumstances," Sharma said.

Domestic volumes increased 11 per cent to 706,078 units.

Two-wheeler sales rose 11 per cent to 586,547 units, while commercial vehicle volumes grew 13 per cent to 119,531 units.

Domestic business revenue increased 26 per cent Y-o-Y, supported by growth across internal-combustion engine (ICE) and electric vehicle (EV) segments.

Electric Vehicle Expansion and Future Plans

EV revenue nearly doubled from a year earlier and accounted for about 30 per cent of the domestic business. Bajaj Auto said demand continued to exceed available capacity, constraining the full growth potential of its electric portfolio.

Chetak recorded its highest quarterly volumes, revenue, and profitability.

The company is augmenting production capacity to improve product availability, support international expansion, and drive further growth.

Its electric three-wheeler (e3W) business also continued to expand rapidly, with revenue rising about 80 per cent.

The business has reached nearly two-thirds the size of Bajaj Auto's conventional 3W franchise.

The company said it had initiated capacity expansion and was widening the reach of its Riki e-rickshaw, which is now present in 150 cities.

"We are now recording double-digit profitability in the EV business," Sharma said.

Domestic motorcycle revenue recorded double-digit growth, aided by the sports motorcycle segment, where retail sales grew 1.5 times as fast as the rest of the industry.

Sales of the Pulsar, Avenger, and Dominar brands increased by double digits, while the overall sports segment grew nearly 50 per cent.

Bajaj Auto plans further upgrades across the 125-160cc Pulsar range.

"Beginning in November last year, we undertook a portfolio makeover because several products that had served us well and driven market-share expansion after Covid had begun to show end-of-cycle fatigue," Sharma said, adding that over the next six weeks they will complete the portfolio makeover by introducing another 10 substantially new motorcycles in the 125cc and 150cc Pulsar segments.

"By the festive season in October, we should have a completely new and upgraded portfolio.

"Part of it is already in the market, while the remaining products will begin rolling out from August," Sharma elaborated.

The KTM and Triumph premium motorcycle business maintained its growth momentum, with domestic revenue rising 60 per cent Y-o-Y.

The company attributed the performance to the 350cc portfolio across the two brands, the launch of the Triumph Tracker 400, and the expansion of the combined KTM-Triumph retail network to more than 90 towns.

Bajaj Auto generated more than Rs 2,300 crore in free cash flow during the quarter. Its surplus funds stood at over Rs 21,000 crore at the end of June.

Capacity Expansion Details

Bajaj Auto will increase its annual production capacity by nearly 25 per cent — from around 7 million vehicles to more than 9 million — over the next few quarters, as strong export demand and rapid growth in electric vehicles (EVs) stretch capacity across key product segments.

The brownfield expansion will focus on electric two-wheelers (e2Ws), electric three-wheelers (e3Ws), premium motorcycles, and certain internal-combustion engine (ICE) 3W models, Rakesh Sharma, joint managing director (MD), Bajaj Auto, said during a post-results media interaction.

"We will progressively increase it to over nine million units over the next few quarters," Sharma said, adding that capacity constraints had become particularly evident in these four areas.

The company did not disclose the capital expenditure required for the expansion.

Sharma said the investment would depend partly on where the additional capacity was created, with final plans and drawings still being prepared.

Bajaj Auto is evaluating different locations for the investment and has not decided whether the capacity will be added in Maharashtra or another state.

However, Sharma confirmed that the expansion would be brownfield rather than greenfield.

He said it was difficult to provide a company-wide capacity-utilisation figure because Bajaj Auto manufactures several products and some capacity can be switched between models.

Constraints, therefore, arise from particular product mixes rather than uniform utilisation across factories.

The expansion will also require Bajaj Auto's suppliers to scale up simultaneously.

"Capacity must be viewed at the system level," Sharma said, adding that electronic components, magnets, motors, and battery parts would need to expand alongside vehicle-assembly capacity.