Bajaj Auto looks to enter Brazil in 18 months

Written by Rachit Vats | Mumbai | Updated: Nov 16 2013, 15:53pm hrs
Bajaj Auto, The country's second largest bike maker by volume, is looking at scale up the overseas business further. In the pipeline are plans to enter Brazil, the largest market in Latin America with an annual output of more than 7-lakh motorbikes, over the next 18 months.

Our strategy is to scale up presence in key markets including Africa and the Latin America. The objective is to grow exports further, Rakesh Sharma, president international business, said. We will move into the Brazil, a key market in the Latin America, over the next 18 months. Right now, we are studying the best options to tackle this market dominated by Japanese player Honda, he added.

While the company, whose exports account for over 40% of total sales, did not give details of its Brazil foray, sources say it will tie up with Japan's Kawasaki in the region to market its products. Bajaj may also look at setting up its facility in Brazil.

The company already enjoys a healthy geographical spread for its export business. Africa accounts for the largest share by volume at 47%. It is already a market leader in Nigeria, the largest market in the continent, followed by Asia and Middle East at 32%. Latin America, where the company is relatively new, accounts for about 20% of the turnover and has the potential to be as big as Africa.

"Both Africa and Latin America are capable to deliver similar growth and will continue to be our area of focus, said Sharma.

While Sharma did not give any details on the incremental value that the foray into the Brazilian market will bring for the overall international business, sources said the exports business has the potential to contribute about 50% of the company's total turnover over the next five years.

At present, Bajaj Auto exports to 57 countries with a market leadership in 12 of these, including Nigeria and Colombia. During FY13, Bajaj exported 1,547,157 motorcycles and three-wheelers. This represented a decline of 2.1% compared to the previous year. Though, in value terms, exports grew by 4.1% to R6,713 crore.

"Latin America is still new for us but already a significant contributor. This is because we have a full range of motorcycles and three-wheelers there unlike the African market, which is more utility driven," Sharma noted.

In Africa, the motorcycle major will also look at making a debut in West African clusters where it has a weak presence so far. The company will look at cluster nations including Guinea, Cameroon, Senegal and others for growth.