Pune-based Bajaj Auto Ltd plans to focus on the executive segment in motorcycles with the launch of its Discover 110 and a new version of the Discover 125 motocycles on Wednesday.
Bikes with engine displacement of 100cc to 135cc are considered to be in the executive segment by the maker of Pulsar motorcycle.
“We would like to exit calendar 2018 with a 20% market share in the executive segment. These two bikes should increment annual sales by about 50,000 to 70,000 units to meet the target," Eric Vas, president of the company’s motorcycles division, said at a press conference.
Prior to the launch, Bajaj had a lone offering in the segment, the Discover 125, which has a market share in single digits, the company said. The executive segment is being seen as an opportunity since it accounts for nearly half of total motorcycle sales, according to Vas.
Bajaj had a cumulative market share of 31% in the entry-level (under 100cc) and premium (above 150cc) segments in the fiscal 2017, according to a company presentation made at the event. “Having created a leadership position in the entry-level and premium segments, resources will pivot around the executive segment which is a huge opportunity," Vas said, adding that the company will not take its eyes off other segments.
According to Vas, consumer preference over the past 12 months has shifted to 110cc and 125cc motorcycles from the volume-driving 100cc segment. The Discover 110 has an engine displacement of 115.5cc while the new Discover 125 packs in 124.5cc. Both engines are compliant with the Bharat Stage VI pollution norms.
“We believe this brand will appeal to that customer who wants to upgrade from 100cc but doesn’t want to go to 150cc," he said.
For the fiscal up to November, Bajaj’s sales grew 23.8% to 1,74,566 units in the 110cc to 125cc segment while the broader segment clocked 18,15,750 units, a 13.1% rise, as per data provided by industry body Siam (Society of Indian Automobile Manufacturers). Automakers consider dispatches to dealerships as sales. The category includes other Bajaj models such as the Platina and Boxer.
After making various changes in engine displacement within the Discover brand since its launch in 2005, Bajaj Auto seems to have settled down. “There will be no other additions under this brand. For the past two-and-a-half years, we relooked at our strategy and have aligned ourselves with the reality of the market. We believe we have the right set of decisions around the Discover," Vas said.
Planning to garner 23% of total motorcycle market share by the end of 2018, the maker of the Pulsar is expecting a major contribution from this segment. According to Vas, semi-urban and rural geographies would account for 65% of Discover sales, as is true for the broader executive segment.
Bajaj’s dealership footprint has over 600 dealers, most of whom are in urban areas. The network is set to expand across geographies during the year, Sumeet Narang, vice president of marketing, said without disclosing specifics.
Analysts say the going will be tough in a fiercely competitive segment dominated by Honda Motorcycle and Scooter India Pvt. Ltd (HMSI) and Hero MotoCorp Ltd. Weighing in will be the shift in preference from commuter motorcycles to scooters, said Aditya Jhawar, an analyst at Investec Capital Services (India) Pvt. Ltd.
“There is not much buoyancy in the motorcycles market, so when the market is not growing, players will need to be more aggressive. While the new launches have more features, it will be an uphill task for Bajaj to meet its target only with the Discover brand. Increased efforts towards more cohesive strategy will help," he added.
Lower brand recall for the Discover brand will not help matters, said another analyst on condition of anonymity. “The volumes for the Discover have been falling in the past year owing to Hero’s aggressiveness. Bajaj will be able to clock the desired volumes only if they have a unique way of reaching the customer," he said.