The tie-up between Bajaj Auto Ltd and Britain’s Triumph Motorcycles Ltd is set to pose a significant challenge to Royal Enfield, the undisputed leader of the 350-600cc middleweight premium motorcycle pack in India and other emerging markets. As part of the partnership, Triumph, a premium British motorcycle manufacturer, will take the lead in product development and design, while Bajaj will use its extensive vendor base to reduce the manufacturing cost.
The Bajaj-Triumph alliance is also eyeing the South-East Asian, African and Latin American markets, where Royal Enfield is present.
Bajaj and Triumph had formed a non-equity partnership in August 2017 for a global alliance to develop “mid-capacity motorcycles". However, final touches to the commercial agreement between the two are still in the works.
According to Shoeb Farooq, general manager, Triumph Motorcycles India, the idea is to use the strength of Bajaj and its huge vendor base to bring down costs.
“On the product side, things are progressing well and, in another few months, the commercial agreement will be there. The research and development, design and quality of the b will be driven by Triumph. Every manufacturer has certain capabilities, such as the vendor base and the ability to bring down the price, which Triumph does not possess," said Farooq in an interview.
Royal Enfield has dominated middleweight bikes in India, but this segment is attracting increasing interest from both domestic and foreign firms, drawn by the potential of bigger operating margins accruing from higher price points.
In addition, following an increase in sales of bikes above 150cc, companies expect the market for the 350cc category to expand. The re-entry of Czech’s Jawa Motorcycles into India, announcements by American motorcycle maker Harley-Davidson Inc., and the Bajaj-Triumph alliance are a testament to the emerging opportunities.
According to Farooq, there is huge growth possibility in this segment not only in India, but also in South-East Asia, Africa and Latin America.
“It is not about India alone, but also about picking up the right markets globally and taking this product and the collaboration there. Once the commercial agreement is done, I guess work on the distribution side of the business will begin, which is regarding how the product will be launched in the market," Farooq said.