With the gap between Bajaj Auto’s sales in the home market and the export market narrowing to 1,74,486 two-wheelers between April and January, it’s possible that exports could soon outstrip sales in the home market. In the ten months to January, volumes locally were 15,20,278 vehicles while international sales stood at 13,45,792 units.
Five years back, Bajaj Auto, the Pune-based motorcycle maker, had more than two-third of its volumes coming from sales in India. The equation has changed — domestic volumes account for just above half of its total sales. Bajaj has seen a continuous decline of numbers in India, while its exports have grown steadily.
Between April and January, while domestic volumes fell by 14.26%, exports grew by 21.76%. The company declined to talk about this change. However, the analyst community have in multiple reports pointed out the growing problem. “We expect exports to report a double-digit growth in 2015-16… Bajaj Auto still needs to arrest the decline in the domestic marketshare in the two-wheeler segment,” mentions a recent Kotak Institutional Equities report on the company.
In just one year, the company’s domestic marketshare has dropped from 14.17% to 11.28%. In the third quarter, Discover, Bajaj’s largest selling motorcycle, saw a drop of 46%, while its over all domestic volumes dropped by 17%.
“In the domestic market, the competition is very intense, and Bajaj is losing the market due to lack of products. The products are very old, and the competition has better products, at better prices. However, internationally its product pricing is very attractive compared to their global competition, especially in African continent,” said Amit Kaushik, principal analyst at consultancy firm IHS.
Rajiv Bajaj, managing director of Bajaj Auto, however, seems unnerved with this change. He blames it on the industry. In a recent television interview, he said that the industry has been sluggish, and the sentiment revival will depend on the Union Budget.
But maybe that is not completely true — Hero MotoCorp grew at 7%, Honda Scooter and Motorcycle (HMSI) grew 23%, Yamaha Motors grew at 23% and Royal Enfield’s number grew at a whopping 64%, in the same period. Analysts said that Bajaj has an incomplete portfolio.
Bajaj does not have a product in the scooter segment which has seen a 53% growth in the past two years, while motorcycles grew only at 7%. The company had launched the Bajaj Kristal in 2009, but discontinued it within a year. Every fourth two-wheeler sold today is a scooter, and HMSI leads the pack with almost 55% of the scooter market.
“You need to have a complete portfolio and be in segments where there is customer demand. Somewhere you need to be in the scooter segment because that volume is growing,” said Abdul Majeed, leader, auto, PwC.
To arrest its dropping marketshare, Bajaj has plans to launch new models of the Platina, Avenger and Pulsar in over the next six to eight months, or so. As far as the overseas market is concerned, it exports its motorcycles to 60 countries, and had $1.33 billion of its revenue from exports in 2013-14. It also entered new countries like Argentina, Turkey, Ghana, Afghanistan, Lebanon, Guinea, Togo, Mali, Burkina Faso and Liberia, to amplify its exports.
However, even in international markets, the competition from Indian companies are rising. Hero MotoCorp has a full blown international strategy. It is already present in 20 countries, and plans to enter another 20, where it will fight directly with Bajaj. Hero’s export in the April to January period grew 74% to 179,172 units. For Honda, which exports a lot of its Indian made motorcycles to similar geographies, grew at 22% to 160,193 units.