Nigerian terror threats keep Bajaj Auto afloat

Nigeria’s call for a complete ban on ‘okada’ or motorcycle taxis could spell trouble for India’s third-largest two-wheeler maker Bajaj Auto, which depends on the West African country for nearly a quarter of its two-wheeler exports.

Nigeria’s federal government is considering a ban on okada to curb growing insecurity in the beleaguered country, even as a top economy awareness group, the Nigeria Economic Security Agenda (NESA), called on the government about the repercussions of the ban. warned.

Rakesh Sharma, Executive Director, Bajaj Auto said, “There have been talks in government circles about banning motorcycles as they are being used for terrorist activities in parts of Nigeria. No information has been received but we are in touch with the Indian High Commission there and we are monitoring it.

impact on citizens

According to NESA, the nationwide ban will affect the 5.2 million citizens who operate these taxis and another 15 million indirectly dependent on them, including those working in vehicle service stations. The ban has been in force in Nigeria’s largest city, Lagos, since June.

“They (motorcycle taxis) carry around 40 million people every day. Industry employs a large number of people like mechanics. Therefore, putting a complete ban on motorcycles across Nigeria would be a big challenge for anyone who does. We expect normalcy to return and it is not as if the entire country is troubled by terrorism,” Sharma said.

Honda is the largest player in Nigeria, followed by Bajaj Auto, Hero MotoCorp and TVS Motor Company.

imminent pressure

Pune-based Bajaj Auto is heavily dependent on its two-wheeler exports, which now account for 57 per cent of the company’s total sales during the June quarter. The maker of Pulsar and Boxer exported 5.32 lakh two-wheelers during the June quarter, as against 3.14 lakh sales in the domestic market during the same quarter.

Nigeria could become the latest crisis market for Bajaj Auto. Stuck in the economic turmoil, Sri Lanka was once a big market for Bajaj’s three-wheelers as well. While there are over 70 countries where Bajaj Auto exports its two-wheelers and three-wheelers, the company has expanded into new geographies such as Latin America to reduce its dependence on larger markets.

Mitul Shah, Head of Research, Reliance Securities says, “Nigeria being the largest market for Indian two-wheeler exporters, any adverse development in the country will significantly impact the overall exports of these companies. Heavy pressure is expected on exports.Therefore, we have cut our export volume estimates for FY2013 and FY24 by 16 per cent and 14 per cent respectively.

Published on

31 July 2022

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