Royal Enfield has some tough competition coming up its way. It will arrive in 2022 from the joint stables of Bajaj Auto and British motorcycle company, Triumph Motorcycles, and it will be a brand new range built ground up with equal participation by both partners.
Nearly three-and-a-half years after announcing plans to work together, Bajaj Auto and Triumph Motorcycles, finally signed a long-term, non-equity partnership agreement in Pune on Friday to work together to build a new range of mid-capacity motorcycles in the 200 to 750 cc range for India and global markets.
The first motorcycle in India will be in the less than `2 lakh range. Bajaj Auto will also be taking over distribution of Triumph motorcycles in the Indian market and also distribute the Triumph through its own global network. Triumph in turn will take this jointly developed bike to developed markets. Triumph will continues its CKD operations in India where it will make the existing range.
Bajaj Auto MD Rajiv Bajaj said there will be no equity investments and this partnership was based on mutual benefit. Not all JVs and equity partnerships work and we had a non-equity partnership with Kawasaki which worked well for 35 years while other JVs and equity investments in the auto industry failed to sustain, he said.
Equity was not the only lever to work with, Bajaj pointed out. Together we make a great match and complement each other well, he said, adding that more important than equity was mutuality of purpose and it is this that will keep us together.
They will design, engineer, develop and manufacture together and create a new engine platform which will have multiple options, he said, adding that though the agreement took time, they had spent this time working together on R&D with both teams closely involved.
Bajaj said he had reached out to Triumph in 2007, expressing a desire to work together and after initial meetings nothing progressed and it was in November 2016 that Triumph promoters felt they were ready for a partnership and reached out to Bajaj. Word given in 2007 was honoured by Triumph in 2016, he said.
Bajaj will manufacture the Triumph motorcycle at its Chakan plant in Pune where it makes the Pulsar, KTM and Chetak scooters and has a capacity to make 1,00,000 bikes a month. For Bajaj Auto, the tie-up with Triumph is an entry into the segment of sub 500 cc range where it will find difficult to sell a Bajaj product in the lifestyle or luxury segment. These products will not go with a Bajaj badge and will be sold only as Triumph bikes.
Bajaj said they wanted to be a versatile motorcycle maker that can sell a $400 bike in Africa to a €8,000 bike in Europe. He was also not worried about the possible impact on the KTM brand that Bajaj sells in India and said there is a place for everyone.
This is the first time that Triumph has entered into this kind of an agreement and it adds value to both the companies and have a positive impact on both companies, Triumph CEO Nick Bloor said. This tie up was important for them to enter the segment of smaller bikes. Bloor admitted that they had tried their hand at building at 250 cc segment and found it difficult and felt the Indian motorcycle manufacturers were better at it. His respect for all Indian manufacturers and their ability to produce quality bikes had gone up since then, he said.
This was an exciting segment and it was an aggressive price point they were working on, he said. Triumph entered Indian market in 2013 and does annual sales volume of around 1,000 units in the Indian market and 60,000 units globally. Bloor said with this partnership they will be able to make the best of Bajaj’s understanding of the market place and its ability to build a network. Network can make or break a company, Bloor said.
Triumph will be going into markets where it does not have a presence and Bajaj is already present such as Indian subcontinent, Africa and Latin America, he said. Similarly, there was a demand for bikes of this segment in developed market which Triumph was not able to address, he said. So, for them it was a new entry point in several high-volume emerging markets, he added. This will create a new entry point to the Triumph range around the world and ensure Triumph can compete in important large segments of the global motorcycle market, and attract new customers to the brand.
Bajaj Auto ED Rakesh Sharma said this motorcycle will target a big segment of the market and it will not be a niche play but will get meaningful volumes. The distribution channel network will depend on how the demand pans out. A separate Triumph business unit will be created at the company, Sharma said.
Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.