Two-wheeler major Bajaj Auto is set to fight back falling sales with a renewed focus on bigger engine bikes backed by six new launches in 2009. The company will kick off with a new product, which will directly target rival Hero Honda’s best-selling Splendor/Passion range, the 135 cc XCD priced at Rs 45,000 and due for debut on January 21. Followed by this, the company also plans two more new rollouts in value-segment (125-135 cc engine size) in April and July and three premium models (150 cc and above) later this year.
Speaking to ET, Bajaj Auto managing director Rajiv Bajaj said: “We want to pursue our strategy of being a motorcycle specialist and our focus is on motorcycles in the 125 cc and above engine size, which has 35% share in the domestic two-wheeler market. Currently, we own 50% of the market for 125 cc and above engine size. We want to grow both our product range as well as our marketshare in that segment. We do it through our DTSi engine technology, and for us, that’s the core differentiator.”
Apart from a head-to-head pricing with its rival brand, the XCD 135 cc DTSi will come with a number of features than the premium stable mate Pulsar. That includes a 5-speed gearbox, a 10.5 hp output and 65/70 km per litre mileage. It will sport a digital cockpit, nitrox rear suspension, low-friction front suspension, twin pilot headlamps and LED tail lamps.
The bike will roll out from Bajaj’s Waluj plant and will also be produced at Pantnagar from February. Bajaj Auto has been badly affected by the defaults that dried up financing in the two-wheeler market. It’s motorcycle sales declined 8% to 1,534,149 units during April-December from 1,660,182 units for the same period last year. In December alone, it’s sales skid 33%.
“In the entry-level segment, we witness a major sales growth with our Platina model,” said Mr Bajaj. “Due to defaults, finance dried up and our numbers fell to about 40,000 units per month from 75,000 units,” he added.
In 2006 and 2007, the entry-level segment, where cheap and cheerful 100 cc motorcycles rule, suddenly expanded when financiers got aggressive and offered bikes at Rs 2,000 down payment. “It was bad business and it’s over and no one will go back to that structure,” said Mr Bajaj. For Bajaj, that leaves the problem of a shortfall of 30,000-40,000 motorcycles a month.
Mr Bajaj is using Bajaj Auto Finance (BAF), the in-house financing company, to get over the entry-level sales spike. “However, NBFCs typically have higher cost of finance. So we’re countering that with 1-2 years of extended free warranty cover,” Mr Bajaj said. Already BAF has financed 25,000 bikes in December despite its 3% higher interest rate. “When compared to other banks, that is a good performance,” said Mr Bajaj.
Two years ago, Bajaj Auto had announced that it would not look at the entry-level segment because there’s no money there. “We are not abandoning 100 cc bikes,” said Mr Bajaj. “All we are saying is that we would want to address the mid/value-segment that is now ruled by our competitor’s Splendor/Passion range, with 125 cc and above products.”
Source: Economic Times