Although Bajaj Auto Ltd’s push for higher market share has consumed their profit margins, the world’s sixth largest and India’s second largest manufacturer remain unfazed.
Bajaj is pushing for a larger share of the Indian motorcycle market through aggressive product pricing, according to Mint. “Aggressive product pricing” could be construed as the cheapest two-wheelers in India.
Competition for motorcycle sales is expected to peak in the next few months with the coming festive season. Most of the exponential growth is expected from rural areas where consumer spending sentiment is on the rise.
Bajaj seeks to increase the 110- to 125cc category in addition to their sub-100cc entry-level segment, said Kevin D’sa, Bajaj’s President of Finance said. The company intends to achieve 20% domestic market share this fiscal year and sees 25% as the long-term goal.
“We want to expand the bottom of the pyramid and take the entry-level segment share to 45% to 50% from 33% at present,” he said, adding that the new 110- to 125cc motorcycles are expected to debut in the last quarter of this fiscal.
According to the Society of Indian Automobile Manufacturers (SIAM), Bajaj Auto Ltd’s market share in the three months to June had expanded to 16.27% from 13.96%, compared to a year ago.
Bajaj’s plans to conquer both segments are likely a sore thumb in the eyes of their rivals Hero MotoCorp Ltd., Honda Motorcycle and Scooter India Pvt. Ltd. and TVS Motor Co. Ltd. who had lost marginal market share to Bajaj last quarter.
Investors were disappointed with Bajaj Auto’s announcement of lower than expected June quarter earnings (due to lower profit margins). They expect to witness a downtrend in profit margins for the next six to eight quarters if there are no further price cuts.
Bajaj Auto Ltd is also the technical partner to KTM Motorrad AG in building the lower capacity KTM Duke models. The Indian manufacturer has also exported the Pulsar 150, Pulsar 200 and Dominar 400 models to Malaysia.
Bajaj Auto Ltd has finally made a crucial and important decision to boost the production of Husqvarna motorcycles by bringing the brand into a production partnership with KTM. This interesting move will indeed enhance the output of Husqvarna and feed the demands of the market. (more…)