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Rajiv Bajaj talks about Bajaj Auto's future strategy

by ET Posted on 28 Jan 201313,784 Views2 Comments

Bajaj Auto's Rajiv Bajaj steadfastly pursuing his strategy of differentiation and specialisation

 

Rajiv Bajaj

 

 

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."

 

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