Rajiv Bajaj talks about Bajaj Auto's future strategy
At least once a month at the breakfast table at the Bajaj family residence within the campus of Bajaj Auto Ltd (BAL) on the outskirts of Pune, the patriarch has a question for the MD & CEO of the country's second-largest two-wheeler maker. "When will BAL become the No. 1 two-wheeler company in the country," is Rahul Bajaj's not-so-occasional query to son Rajiv.
Rajiv's answer on many such days is: "We are No. 1 in technology, in exports, in market cap, in profitability....the only bit that remains is to be a leader in volumes."
A few days ago, the 46-year-old CEO told this writer. "We need to take the longer route to that [to become No. 1 in volumes] because only in mathematics is a straight line the shortest distance between two points. I tell my father it's not as if we have given up on that metric; we're just taking the more profitable road there."
The Scooter Segment
The "longer route" Rajiv is talking about involves a re-entry into the entry-level market, which accounts for 65% of the bike market; BAL recently launched the 100 cc Discover T in this segment, and Rajiv is at pains to point out that it is not a me-too product, but a well-differentiated one with superior power, features and styling, and "more expensive than the most expensive product" in the 100-cc segment.
The second milestone of the "longer route" is unlikely to appear in the short to medium term. Rajiv says he "may" return to scooters, but only after BAL reaches a "dominant" global share in bikes from 10% today to 30% or even 40%, a point at which BAL may feel there is little headroom left to grow the motorcycles business.
"One day BAL will have to come back to scooters but I am sure it will be a premium product, and high on fuel efficiency," says RL Ravichandran, executive director, Eicher Motors, a former marketing honcho at the Pune-headquartered two-wheeler maker.
With scooters growing at a healthy clip of 18.4% in fiscal year 2013 faster than the 0.77% motorcycles are plodding at and everybody from Honda to Hero MotoCorp to Mahindra & Mahindra scoring healthy gains in this segment, there's adequate reason for the chairman (Rahul Bajaj) and board members to gently nudge Rajiv towards scooters. After all, a combination of a presence in the mass market for bikes at the higher end coupled with a scooter portfolio will go a long way in closing the gap with leader Hero MotoCorp.
Says Anil Dua, senior vice-president, sales & marketing, Hero MotoCorp: "If you want to be a significant player in India, you have to be both in 100-cc bikes and scooters. Scooters account for 20% of the two-wheeler market and 100 cc accounts for 65% of the bikes market."
Adds YS Guleria, vice-president, sales & marketing at Honda Motorcycle & Scooters India (HMSI): "You can take an Indian out of the scooter market but not a scooter out of an Indian heart. Scooters are now selling in the commuting segment and in terms of mileage are comparable to motorcycles."