Bajaj falls off pillion seat in two-wheeler marketshare

Written by Yogima Seth | Updated: Dec 31 2008, 08:13am hrs
Honda Motorcycle & Scooter India (HMSI) pipped Bajaj Auto to take the number two position in terms of marketshare and vehicles sold domestically in November. This is the first time ever that Bajaj Auto has sunk to third place in monthly two-wheeler sales. Bajaj Auto chairman and Rajya Sabha member Rahul Bajaj had earlier this month asked in Parliament what steps were being taken by the government for the auto sector as his company is not able to sell vehicles.

HMSI is a 100% subsidiary of Japans Honda Motor Company and entered the country in 2000 to manufacture scooters. Its entry in the bike segment took place only in 2004. According to Society of Indian Automobile Manufacturers, Bajaj Auto, the countrys second-largest two-wheeler manufacturer until October, registered a dip of 11.9% in sales in November at 82,919 units, compared with HMSIs 94,222 units.

Consequently, HMSIs marketshare went up from 10.5% in November last year to 16.6% last month, while Bajajs marketshare fell from 26.5% to 14.6%. Bajaj Autos marketshare has also fallen 19.2% during April-November of the current fiscal against 23.9% during the same period last year.In pole position remains Hero Honda Motor India with 49.6% marketshare, and in fourth place is Chennai-based TVS Motor Company with 13.7%.

Explaining the slide in marketshare, Bajaj Auto managing director Rajiv Bajaj said, November is an aberration as our billing to dealers is far lower than their retail sales as we are correcting stocks and the trend will continue in December, too.

However, analysts feel that companys high dependence on retail finance and lower penetration into rural markets has hit the companys sales. With major financial institutions steering away from retail finance of two-wheelers, Bajajs sales have taken a huge hit. Over two-thirds of the companys vehicles are financed, unlike Hero Honda, where over 70% of purchases is in cash, says Vaishali Jajoo, senior auto analyst, Angel Broking.

Bajaj Autos limited presence in the scooter segment has also lost it marketshare vis--vis HMSI, where it constitutes 65.8% of sales. Bajaj is gradually moving into gearless scooters and until we have new models in the category, which is expected in the next six months, their scooter sales will be low, says a Mumbai-based analyst.

Moreover, ever since the company consciously decided to concentrate on the medium and high end, its motorcycles have been predominant in urban areas where the market is already saturated. Consequently, its penetration in rural areas continues to be low, the analyst adds.

HMSI, on the other hand, says there were several factors that helped it gain marketshare. Apart from scooters, including the Aviator that was launched early this year, the 125cc CBF Stunner motorbike received a tremendous response. This, coupled with a widening of the companys dealership network to 320 dealers has helped us, says NK Rattan, vice-president (sales & marketing), HMSI.

However, Bajaj is optimistic that the company will continue to maintain its number two position for the whole year ending March 31. We are far ahead this year and will definitely end 2008-09 in second place. In fact, we are confident that with the new product launches scheduled from next month until August 2009, the company will be able to more than maintain this position, adds Bajaj junior.

The dramatic drop in Bajaj Autos volumes has also widened the gap between it and Hero Honda. The difference between the two has almost doubled to 1.98 lakh units, against last Novembers 1.05 lakh units. In 2005-06, there was a reversal, whereby Bajaj Auto increased its marketshare by 3% due to the overwhelming response to its Discover, whereas Hero Honda registered a dip of 1.62%, resulting in a narrower gap in volumes between the two.