1. Bajaj Auto rides the global highway, aims to become world’s top motorcycle brand

Bajaj Auto rides the global highway, aims to become world’s top motorcycle brand

Instead of focusing on domestic sales only, Bajaj Auto is eyeing the overseas market as it aims to become the world’s top motorcycle brand.

By: | Updated: January 5, 2015 11:44 AM
Bajaj Auto, Rajiv Bajaj, Bajaj motorcycle

In the home market, Bajaj Auto hopes to regain the lost 6% market share by revisiting the Discover brand.

Not that he loves scooters less, but that he loves motorcycles more. Rajiv Bajaj wants to make India the motorcycle capital of the world: like cars from Germany, wine from France, electronics from Japan and chocolates from Belgium, motorcycles, the managing director of Bajaj Auto, says should be associated with India.

And while he would like his firm to be at the forefront of this drive, it’s going to be tough given its market share has dipped to 18% from 24% not so long ago. While Honda Motorcycle and Scooter India’s (HMSI) tremendous performance has hurt the Pune-based company’s sales—in November, for instance, Bajaj Auto’s volumes dipped 6% while HMSI’s volumes were up by 17%—market watchers believe staying away from scooters has been a mistake.

Bajaj, who describes his nine-year journey at the helm of Bajaj Auto as ‘Sapere Aude’ or ‘Dare to be Wise’, believes otherwise. His philosophy is simple: specialise in a niche segment, don’t get into price wars. He’s convinced that if his firm is reporting 20% profitability, it’s because it has stayed away from scooters and cheaper motorcycles. “We will never sell at a lower price to gain market share. There is a correlation between price and quality and price wars destroy the company and the industry,” asserts the older son of Rahul Bajaj.

Bajaj-market-share

But the market isn’t convinced and Goldman Sachs says Bajaj Auto will face significant headwinds across segments, in the near term; also the decision to stay away from the fast growing scooter segment, which it estimates will grow at 24% versus 8% growth in motorcycles over FY14-18, could hurt. Given that demand for motorcycles could be muted, the brokerage believes Bajaj could further lose market share pointing out that it has lost share even in the executive segment where the Discover 150 model failed to gain momentum.

At the company’s annual general meeting recently, Bajaj had spelt out his strategy which he said was different from those of other domestic players who focused on the home market. His goal was to be best in the motorcycle category across the world. At a recent meet with analysts, the company said it was targeting 32,50,000 motorcycles and 4,50,000 commercial vehicles in FY20. That means doubling the
business in five years since FY15 sales are estimated at 16.21 lakh motorcycles and 2.94 lakh 3-wheelers. Bajaj’ exports have doubled in the last five years and it is confident of keeping up the momentum.

Bajaj-market-share

In the home market, it hopes to regain the lost 6% market share by revisiting the Discover brand, making it more youthful and positioning it as a commuter bike that offers much more than mileage. The Pulsar will move up the sports premium ladder with new launches in the 200-400cc  category. A new electric start Platina is being launched next month and two new brands will be developed, over the next 12 months, to plug gaps in the portfolio.

In the superbike segment, Bajaj says every third KTM sold across the world is made by Bajaj Auto and around 65,000 KTM bikes will be shipped from its Chakan plant to US, Europe, Japan and Australia. The Austrian KTM brand enjoys a 53% market share in India for bikes in the R1,75,000-2,50,000 segment. However, analysts say it already has high market share in the larger markets such as Nigeria, Egypt and Sri Lanka and could see more competition with the entry of TVS, Hero Motocorp and HMSI. “Near term macroeconomic risks within oil exporting countries could impact Bajaj’s export margins negatively,” notes one analyst.

The company, however, sees room to grow due to lower penetration of motorcycles in Africa, Latin America, and Asia and Middle East. Bajaj has a 23% market share in the African market versus 47% for the Chinese brands, 27% for the Japanese and 3% for other Indian companies. Trends show that these markets are moving towards larger and better looking bikes where a well-entrenched player will benefit.

Bajaj junked the low technology scooter in favour of becoming a premium bike maker and he is not going to let some ups and downs in business to change that focus. Prof. Yamaguchi taught Bajaj Auto to make better motorcycles, Jack Trout taught it how to sell motorcycles and Bajaj has frequently dived into the principles of yoga and homeopathy to learn the strategies that have built the Bajaj motorcycle brands – strategies and learnings that will now be tested.

  1. D
    daniel Mcgregor
    Jan 6, 2015 at 12:46 am
    Hey my Girlfriend is getting me Bohn Gear from amazon! I heard they have great reviews, and can be worn under my own jeans too.. www.BohnGear.com
    Reply
    1. K
      kiran
      Jan 5, 2015 at 7:00 pm
      Closing out- dated technology scooters was a wise decision with the impending and now established market by Honda. However, Bajaj was expected for years to develop a modern technology fuel efficient scooter, which it never did and even resisted frugal technology trends & innovations in the scooter market. Finally it excluded scooters totally & thus stopped catering to 50 % of India potion-females , which at all if wants to ride a two wheeler, it will be a scooter only. Thus Bajaj deliberately excluded 50 % of India 's potion from its market share by choice !
      Reply
      1. K
        KSRao
        Jan 5, 2015 at 7:47 pm
        If Rahul doesnt want scooters to emerge from the present unit, he can build an independent company to solely focus on scooters.
        Reply

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