Bajaj Auto plans new models to improve sales, analysts sceptical

Bajaj Auto plans new models to improve sales, analysts sceptical
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First Published: Sun, Jan 11 2009. 10 45 PM IST
Updated: Sun, Jan 11 2009. 10 45 PM IST
Mumbai: India’s second largest manufacturer of motorcycles by sales in the last fiscal year, Bajaj Auto Ltd expects to arrest a decline in sales with the three new models and variants that it plans to launch in 2009.
In December, the company’s two-wheeler sales, including exports, declined by 33% to 118,510. In the April-December period, sales fell by 8% to 1.54 million. In November, for the first time, Japanese two-wheeler maker Honda Motorcycle Scooter India Ltd, or HMSI, surpassed Bajaj Auto sales by volume in the domestic market. HMSI sold 95,222 two-wheelers against Bajaj Autos’s 82,919 units, said Hitesh Kuvelkar, associate director of research at First Global Securities Ltd. To be sure, HMSI’s sales are dominated by scooters, unlike bikes that dominate Bajaj Auto’s product line. Still, some analysts link Bajaj Auto’s poor performance on its product and distribution strategy.
“While we continue to be strong in the entry and premium-level bikes with 35% and 50% market share, respectively, we are weak in the mid segment,” conceded Amit Nandi, general manager of marketing at Bajaj Auto. “In order to address that, we plan to launch at least three new products starting this month.”
The first of the three launches planned for this year will be a 135cc bike based on Bajaj Auto’s XCD platform and will retail for about Rs45,000, said Nandi. The remaining two, which the company plans to launch in April and July this year, will also cater to the mid-size, value segment. While the XCD 135cc will be positioned as a sporty commuter bike targeting the young, the remaining two would be aimed at those who prefer conservative, sedate styling, said Nandi, without giving further details.
But some analysts are sceptical whether the new products will help lift the sagging sales volumes at Bajaj Auto. First Global, in a report dated 7 January, said Bajaj Auto will find it very tough to regain lost market share in the medium term.
Joseph George, an analyst at BNP Paribas Securities Ltd, said the company needs a breakthrough product like its premium Pulsar. “Even though they have worked much harder than Hero Honda in creating a differentiated product, none of them, other than the Pulsar, have been successful.” Hero Honda Motors Ltd is the country’s biggest motorcycle maker.
Given that Bajaj Auto derives most of its sales from urban India—where demand has been relatively harder hit than in the rural market—its sales have been dented more than those of its competitors.
Bajaj sales have also been hit by a tightening of bank loans to finance vehicle purchases.
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First Published: Sun, Jan 11 2009. 10 45 PM IST