The erosion of Bajaj Auto’s share in the domestic market in the last three years is a result of a trade-off, as the company put more of its resources in high-end motorcycles under the KTM brand in which it first acquired a 14.5% stake in 2007. Since then, Bajaj Auto has increased its stake to 48%.
“Instead of putting money in KTM, if we had spent it on the Pulsar, we would not be selling 7,000 units a month, but would have sold 20,000 units,” said Rajiv Bajaj, managing director, Bajaj Auto.
The country’s second largest motorcycle maker saw a drop of 15.65% in its domestic volume sales in FY15 to 17,70,778 units. Rivals Hero MotoCorp grew 5.18%, Honda Motorcycles & Scooters India grew 25.33% and TVS 20.26%. This was the third consecutive year Bajaj saw a drop in volumes. Unlike its competitors, Bajaj is not present in scooters which has been driving the two-wheeler market of late. For instance, in FY15, while the overall two-wheeler market grew by 8%, motorcycles grew by 2.5% whereas scooters grew by around 25%.
Meanwhile, Bajaj Auto has played a vital role in revamping Autrian sportsbike maker KTM brand. Bajaj said that production of KTM vehicles started in India in 2011, and since then it has introduced sportsbikes like the Duke in the country. This took away a lot of attention. “The work that goes into developing any motorcycle is the same. We are making and selling a third of all KTM motorcylces (globally),” he said. KTM is expected to sell about 1.45 lakh motorcycles in a year.
Bajaj is also the country’s largest two-wheeler exporter, responsible for 62% of all two-wheeler exports in 2014-15. These include KTM bikes which are being manufactured in Bajaj Auto’s Chakan plant. By 2020, KTM expects to sell 2.5 lakh units globally, of which Chakan will make one lakh motocycyles.
However, Bajaj seems to be looking back at India. It rolled out the new Pulsar Adventure Sport series on Tuesday. Apart from the Pulsar, Bajaj is also working on the its Discover range, which was a big hit in the commuter category, but has lost steam. “Our commuter segment has been a challenge. We are working on the Discover, and soon will have something out in the market,” said Sumeet Narang, head of marketing, Bajaj Auto.
The commuter segment of under and up to 125cc segment comprises 80% of overall motorcycle sales. Bajaj’s key models in that segment are Discover and CT. Volumes dropped by about 35% for Bajaj in the commuter category last year.
Bajaj said that in the last three years, the investments has been in niche areas like KTM and the RE60, Bajaj’s dream quadricycle, which has been stuck between regulatory uncertainties for the past 18 months. “We have not been able to reap its benefits. So, one shouldn’t judge a company’s performance in one year,” Bajaj said.
Even with a declining marketshare Bajaj leaves no stone unturned to take on his rivals. “Operating margins of Bajaj is double that Hero MotoCorp and 3-4 times that of TVS,” he said. In the current fiscal Bajaj has plans to ramp up its exports by entering into 14 new countries.