Pune: Bajaj Auto Ltd, India’s second largest motorcycle maker, launched a 100cc model to strengthen its position in the country’s entry-level bike market and gain market share from Hero MotoCorp Ltd.
The Discover 100T motorcycle costs Rs.50,000 in Delhi and is pitted against Hero’s Passion Pro and Honda Motorcycle and Scooters India Pvt. Ltd’s (HMSI’s) Dream Yuga. The bike will be available in showrooms across the country this month. Bajaj claims the new model will be the world’s first to be equipped with four-valve technology and five-speed gearbox.
The new model will help the company differentiate itself in a segment that is getting homogenous, managing director Rajiv Bajaj told reporters. “When you make a me-too product, you only endorse the market leader,” said Bajaj, whose firm has been launching models to challenge Hero in the entry-level, mass-market segment.
Hero Moto sells close to 600,000 bikes a month on an average. Bajaj has a market share of 20% in the segment and expects the new model will sell around 40,000-45,000 units a month to take its market share up to 32%. The entry-level segment in which Bajaj has positioned its bike accounts for 65% of total motorcycle sales in India.
With motorcycle buyers graduating to models with higher displacement engines, sales of entry-level bikes have been under pressure.
Bajaj said his firm has adopted a “counter-intuitive strategy” to reduce risk and reach out to the buyer, “who doesn’t want to move up, but wants something better”.
The new model will help the company offset the decline seen in the recent past in the premium motorcycle segment (150cc and above) where Bajaj commands a 45% share, according to Umesh Karne, an analyst at domestic brokerage Brics Securities Ltd.
Karne said the share of such models has halved from 30% in fiscal 2012 to 16% in the last nine months. He attributed this to high fuel prices and the slowing economy, which have forced buyers to put off the purchase of high-end models. The new offering from Bajaj will step up the pressure on market leader Hero, which has been facing the heat from rival HMSI, he added.
Bajaj will start exports of the model in the first quarter of fiscal 2014.
Plans are also afoot to launch a new model off the same platform within this calendar year. Even as export volumes suffered in some key markets such as Sri Lanka, Argentina and Uganda, the third quarter will be the best for the company in terms of operating margins, Bajaj said. Bajaj Auto will report its December quarter earnings on 16 January.
Bajaj Auto lost 0.5% on BSE on Monday to Rs.2,193.55. The benchmark Sensex shed 0.47% to 19,691.42 points.