BW Businessworld

Trailing Behind

Scooter is back in demand. And by virtue of that, Bajaj is not. With only geared bikes in its twowheeler portfolio, Bajaj is losing its footing in the market

Bajaj auto, the most profitable two-wheeler manufacturer in the country, operates rather differently. It earns more in every bike it sells, but its sales volume is less than half compared to market leader Hero MotoCorp. At a time when global manufacturers shifted their focus to the growing Indian market, Bajaj became India’s largest exporter of two-wheelers. Another thing that differentiates Bajaj, is its decision to stop making scooters when the scooter market took off in a big way. True that these changes and some great launches helped Bajaj to make more money than competitors, but it lost significant share in the domestic market.

Bajaj, the number three two-wheeler player in the country which commanded a little over 20 per cent share in the domestic market in FY10-11, saw its share decline below 12 per cent by FY16. One of the main reasons for the decline is its absence in the scooter market. Abdul Majeed, partner at PwC, says, “Bajaj has low volumes in the domestic market because it only makes motorcycles. In urban areas, scooters have a very large market.” Bajaj’s nearest competitor, Honda almost doubled its market share between FY11 and FY16, on the back of its best-selling scooter Activa. Majeed says, “Bajaj went off the scooter and the segment took off in a different way.” Share of scooters has increased from 14 per cent in FY08 to around 30 per cent in FY16. It is noteworthy that once Bajaj nearly had monopoly in the scooter market.

Stiff Competition

Bajaj has a diverse product portfolio, ranging from 100cc CT100 to 375cc Dominar; and in every segment, it faces a tough competition. Though, it remains undisputed leader in the 150-200cc premium segment with its Pulsar range, Avenger and V15, it has lost market share in the high-volume generating entry-level and commuter segment. Sales of Bajaj’s CT100, Platina and Discover remains much lower than Hero’s Splendor, HF Deluxe and Glamour, and Honda’s CB Shine. In FY16, Bajaj sold 5,90,067 units of CT, while Hero sold 24,86,065 units of Splendor and 11,48,254 units of HF Deluxe.

In FY14-15, Bajaj Discover — once was a popular choice in the commuter segment — experienced a big fall in domestic sales to the tune of 43.9 per cent at 5,52,855 units compared to 9,85,679 units in the previous fiscal. As a result, Bajaj discontinued a few bikes from the series. “Poor acceptance of the Discover series had led to loss of market share for Bajaj in the 100cc segment till FY15; however, the launch of Platina, CT100 and CT100b in the commuter segment in FY16, benefited the company,” rating firm ICRA said in a report. In the premium segment too, competition has stiffened with TVS, Honda, Hero and Suzuki trying to capture the market.

Demonetisation Distress

Bajaj two-wheeler sales have declined month-on-month since the announcement of high-value currency ban on 8 November, 2016. Domestic sales of Bajaj motorcycles were down 11 per cent at 1, 06,665 in December 2016 as against 1,20,322 units in December 2015. In November, domestic sales dropped 10 per cent to 1,54,523 units. Bajaj sold 4,59,427 motorcycles during the third quarter of FY16-17 fiscal compared to 4,75,027 units in Q3 of FY15-16. In January, 2017, its two-wheeler sales(including exports) further declined 16 per cent to 2,11,824 units from 2,52,988 units sold in the same month last year.

The Future
Even though Bajaj’s market share has declined in the past few years, no one can deny its dominance in the premium segment and global market. Bajaj Pulsar continues to be one of the strongest brands in the 150cc-200cc category and the most exported two-wheeler. Bajaj’s recent launch Dominar, which will compete with Royal Enfield bikes, has received positive response from buyers and critics. In an official statement, Rajiv Bajaj, managing director, Bajaj Auto, said, “I can tell you that every single vehicle of the 3,000 we made in January was sold out.” Bajaj aims to manufacture 4,000 units of Dominar this month and 6,000 units in March 2017.
Bajaj’s partnership with Austrian manufacturer KTM, is growing at a good pace in the Indian and global market. It has already sold over a lakh unit and has a large network of 325 KTM exclusive showrooms.

All said, Bajaj’s absence in the scooter market will continue to affect its market share as scooter market continues to grow in double digits year-on-year. If Bajaj, one fine day, announces its re-entry in the scooter market, one can only imagine the kind of buzz it will create.

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