Bajaj Auto bets big on rapid growth in premium segment in India, globally

Bajaj Auto Ltd’s investment in a new plant for premium motorcycles underscores its optimism about the continued growth potential of this segment in India and overseas, Rakesh Sharma, the company’s executive director, said in an interview on Thursday.

“When most companies are conserving cash and reducing costs across operations to steer through this pandemic-induced global economic crisis, Bajaj Auto has decided to invest ₹650 crore to set up a second manufacturing unit in Chakan, where we will make only premium motorcycles and electric two-wheelers including Chetak,” he said.

“This investment should be seen as Bajaj Auto’s standpoint on the evolution of the premium motorcycle segment in India and overseas. We believe that premium motorcycles and electric vehicles would see good play,” he said.

Industry sales of premium motorcycles with 250cc and bigger engines grew more than 12-fold from 54,566 units in FY2011 to 684,425 units in FY2020, according to data from the Siam. Earlier this week, Bajaj Auto signed a pact with the Maharashtra government to build the second plant in Chakan, near Pune. The plant, which will have a capacity to build up to a million motorcycles a year, would make premium motorcycles under the KTM, Husqvarna and Triumph brands along with electric scooters. The plant is scheduled to open by the second half of FY2022-23, Sharma said.

Bajaj Auto plans to launch the Triumph brand of mid-capacity motorcycles via its partnership with the British motorcycle maker by early 2022. It also aims to boost output of Chetak e-scooter next year. Bajaj Auto’s existing plant in Chakan, which has an annual capacity of about 1.2 million units, reaches full capacity each time there is a demand surge, making it difficult for the two-wheeler maker to quickly reduce its order backlog. The company plans to expand retail operations for electric scooters to 30 cities next fiscal. “We plan to take Chetak to 30 new cities in FY22, but we will be closely monitoring how soon the supply chain stabilizes,” he said.