bajaj auto maps out road to ride over slump

Bajaj Auto maps out road to ride over slump
21 Jun, 2008, 0000 hrs IST,Nandini Sen Gupta, ET Bureau


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NEW DELHI: They are the Coke and Pepsi of the bike mart. And as the going gets tough, their rivalry is kicking into top gear. Bike biggie Bajaj Auto is cranking out a brand new product strategy to ride out the slump and reduce the gap with arch rival Hero Honda.

To be officially unveiled to its dealers on July 12 in Istanbul, Bajaj’s new strategy takes into account the sharp decline in numbers at the entry level, where its Platina model enjoys 50% marketshare.

According to Bajaj Auto MD Rajiv Bajaj, a slew of new models (including four new launches this fiscal) will target migrating at least 10% marketshare from Splendor/Passion territory to the next level of 125cc bikes. Bajaj wants to hold on to its current share of the entry-level segment with Platina and grow the top end with its KTM portfolio.

Speaking to ET, Mr Bajaj said, The entry-level 100cc standard segment, where we have over 50% marketshare, has shrunk from close to 40% of the total motorcycle pie to just over 30% due to bad debt issues. We lost numbers there although we improved marketshare.”

That and the growth in the “100cc deluxe segment”, where arch rival Hero Honda’s Splendor/Passion rule, is the reason why the gap between Bajaj and Hero Honda has jumped from 6% two years ago to 17% right now.




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“The shift in segments has been a problem,” said Mr Bajaj. His prescription: grow the segment where Bajaj has core competence and leave the Splendor/Passion territory to Hero Honda. “Fortunately, the 125cc plus segment has grown from 25% to 35% of the total motorcycle market,” Mr Bajaj said.

“We don’t expect the entry-level standard segment to grow beyond the current 30%, so we will try to hold on to our 50% marketshare there. We will ignore the 100cc deluxe, which is dominated by Hero Honda. And we will try to move at least 10% of the Splendor/Passion market to the 125cc plus segment,” he said.

For that, Bajaj has lined up four new launches, one in August end, two more in November/December and the fourth in the January-March quarter. “Some of them will be 125 cc, others bigger,” said Mr Bajaj.

Given that nearly all the motorcycle players are pushing the 125cc segment (new models are due from Yamaha and HMSI while TVS is pushing Flame and Suzuki its 125 cc range), “it’s inevitable that this segment will grow”, said Mr Bajaj. “Since no one has any footprint in the 100cc deluxe market, everyone is looking to grow the 125cc segment.”

For Bajaj, the 125cc plus push will be complemented by a high-end strategy as well as through KTM, the European brand Bajaj has bought into. “Next year we will jointly develop a fuel injection bike with KTM,” said Mr Bajaj.

“The KTM portfolio will have a Probiking focus. Everyone is bringing high-end bikes, but these are imported models and so expensive that the numbers will be very small. Currently, we sell 65,000-70,000 Pulsars and Avengers a year and I would like to triple that. While others sell 500 units, we will do much more,” Mr Bajaj said.

The Probiking focus means the KTM bikes will be sold as KTM on the aspirational plank, but without the customs duty burden that prices imported bikes out of the market. The new strategy ties in with what Mr Bajaj had announced before launching the XCD.