New bike will sport premium features and will be rolled out during festival season at around Rs 40,000
Bajaj Auto is close to launching a third 100 cc bike - in addition to the Discover and Platina - to take on Hero MotoCorp's bread and butter products, the Splendor and the Passion, as well as Honda's new model at the entry level, the 110 cc Dream Yuga. Codenamed D-104, the bike is slated for launch in October-November and is expected to be aggressively priced at around Rs 40,000, a tad lower than its 100 cc and 110 cc rivals.
People close to the development say the new product's unique selling proposition will be latest technology at an affordable price. They add that the soon-to-be-launched model will have features that are not usually found in the value segment, like perhaps an electric start, a digital instrument cluster, front and rear disc brakes and LED lights. Bajaj Auto will also do away with steel and instead using fibre and plastic to make the two-wheeler lighter, and thereby more fuel-efficient and cost-competitive.
The value segment - which some manufacturers call the 'commuter premium' segment - has always been Bajaj Auto's bugbear. It has been unable to make inroads into this turf on which Hero MotoCorp accounts for three out of every four bikes sold. Bajaj has in the past tried to crack this market with models like the Caliber and the Wind but had little success.
Bajaj Auto managing director & CEO Rajiv Bajaj was unavailable for comment.
In engines with capacity of 110 cc and less, Bajaj Auto with the Boxer, CT, Platina and Discover had sales of 310,723 units in the April to June 2012 period. Hero MotoCorp with the Splendor, Passion, CD Dawn and CD Deluxe sold over four times that number in the same period. It's this inability of the Pune-based motorcycle maker to make a dent in the entry-level segment that explains why Hero had an overall 45.33% market share in two-wheelers, and Bajaj 17.57% (in the April-June 2012 quarter).
"Currently the ratio of sales in the mass market is 5:1 in favour of the market leader. Launching a mass market product is a good move to get more volumes, although it does not add incrementally to margins," says Mahantesh Sabarad, senior vice president of equity research at Fortune Financial Services.
What the new bike will be christened is not known. Those aware of the plans say the company is contemplating three options. The least likely is to opt for a bottom-up strategy and launch a deluxe version of the Platina. The second option would be to introduce a new brand with differentiated features. But a more likely alternative would be to go top-down, which means extending either the Pulsar or creating having another Discover in the 100 cc segment. But taking the Pulsar, which has a sporty and macho image, down to the value-segment could dilute its proposition, said an analyst on the condition of anonymity who reckons a Discover variant may be on the cards.
Bajaj Auto is a leader in the sports segment with the Pulsar (in the above 60,000 price range), and in the 50,000-60,000 band with the Discover. But it hasn't been able to funnel those gains towards the largest portion of the pie. Rajiv Bajaj may be hoping that the new 100 cc model will change the game.