In 2003, Bajaj Auto commanded a share of about 93% in the premium motorcycle segment. Its Pulsar, which had been launched in 2001, sold around 15,000 units a month in 2003. The closest competitor was from the joint venture between the now Hero MotoCorp and Honda Motorcycle and Scooter India (HMSI), the Hero Honda CBZ. From holding most of the market in 2003, its market share today has dropped to almost a third at about 32% in the premium segment of motorcycles. The company lost a huge chunk of its share, around 800 basis points, in the last one year alone.
The total volumes sold by the company in the premium segment are about 7,49,620 units in the ongoing fiscal. Analysts attribute the fall in Bajaj Auto’s market share to the increasing competition in the segment, and lower volumes that came from the company’s recent Pulsar refreshes and the 373 cc Dominar, that was launched early last year, mainly due to their lacking appeal to customers. Apart from this, the analysts also point to its late entry into the 160 cc space with the Pulsar NS 160.
Analysts at JPMorgan said, “In the long term we remain concerned about increased competitive intensity in the 150 cc segment, and within that 150-250 cc segment, with a number of competitors like Yamaha, Honda, TVS and Hero, who are planning new launches here. Bajaj Auto needs a successful launch here which till now has not come.”
The premium segment for Bajaj Auto constitutes almost half of Bajaj Auto’s volumes, as nearly 46% or 7.5 lakh units of the total 16 lakh it has sold during this fiscal have been from the premium category. In the premium segment, HMSI and Royal Enfield captured most of Bajaj Auto’s lost market share due to changing buyer trends. HMSI has gained around 220 basis points share at the end of January to 13.8% in the premium category, while Royal Enfield has gained 350 basis points at the end of January to a market share of 27%.
Analysts say that competitors have been able to capture the market because of regularly launching new products in the segment, and constantly refreshing their products. Royal Enfield inches closer and closer to toppling Bajaj Auto from its number one spot in the premium segment of motorcycles. For instance, in the previous fiscal, while Royal Enfield was short of about 3.5 lakh units to the units sold by Bajaj Auto in that year in the premium segment, that number has gone down to less than 1 lakh.
HMSI too is not very far behind. Growing at 40% this year in the premium segment, Miroru Kato, managing director, HMSI, says that the company gets a majority of its sales (about 70%) from the urban markets, and wishes to continue in this way, with a strong focus on the premium segment of motorcycles. To compliment this plan, the company also launched a 160 cc motorcycle, the X-Blade at the Auto Expo this year. Hero MotoCorp too now seems interested in this segment. At the Auto Expo, the company showcased the Xpulse, a 200 cc motorcycle, which it plans to launch soon. Pawan Munjal, CEO and managing director, Hero MotoCorp, says that the company is targeting a huge piece of the premium segment in the next fiscal.
Meanwhile, Bajaj Auto has only managed to launch refreshes in the premium space. The company now seems more eager to increase its share in the executive segment instead, a segment in which it has a market share of only 5.4%. It launched the new Discover 125 cc in January this year, after which Eric Vas, president, motorcycles, Bajaj Auto, says the focus now would be to increase volumes for the company in the executive segment 10-fold to sell 80,000 units per month.
According to the company, the model witnesses sales of around 50,000 every month. However, new entrants in the segment, including the TVS Apache — whose sales have grown by 21% this year — and the resurgence of niche motorcycle brand Royal Enfield, whose sales have gone up more than 10-fold since 2010, have affected the sales of Bajaj Auto. In the premium space itself, the mid-weight segment (or the 250-750 cc range of motorcycles) is the fastest growing (at about 23%), thanks to the rise of Royal Enfield.
Royal Enfield’s growth in this segment has been about 23% in the current fiscal year. Bajaj Auto only has one model, the Dominar, in this segment. According to analysts, the Dominar’s 2,000-3,000 units sold every month are well under expectations. The company does not plan to launch a model in the cruiser segment of motorcycles anytime soon. However, the company has hinted at the launch of a mid-segment motorcycle in collaboration with Triumph Motorcycle by 2020. The company launched refreshed models of the Avenger, however, in January and hopes to see a threefold jump in sales of the model.