Pune: Homegrown automaker Bajaj Auto Ltd and UK-based bike manufacturer Triumph Motorcycles Ltd on Friday signed the long-pending joint venture agreement to make mid-capacity motorcycles for India and the world. The two companies have entered into non-equity, long-term partnership wherein they would jointly produce mid-capacity models or bikes with 200cc-750cc engines.
The two companies in a press conference in Pune on 24 January said that these motorcycles are planned for commercial availability from 2022 in the domestic and export markets.
The agreement enables Triumph to leverage on Bajaj Auto’s strengths in manufacturing; supply chain and distribution not only in India but also in several export markets including Africa. Meanwhile, the Indian bikemaker gets to enhance its scale of operations, participate in the lucrative premium bike segment while tapping into the export opportunity.
The two companies said jointly developed motorcycles will come with a starting price tag of sub-2 lakh, thereby clearly underlining its aggressive strategy to compete with the segment leader Royal Enfield, which has its key high-selling products placed in the same price bracket. Earlier this month, Royal Enfield launched the BSVI version of its bestselling model Classic 350 for ₹1.65 lakh.
Royal Enfield commands a whopping share of over 96% in the mid-capacity motorcycle category (250cc-800cc), suggests Siam data for FY2019.
“We will go for the belly of the midsize motorcycle market under this partnership," said Rakesh Sharma, executive director, Bajaj Auto Ltd.
While the motorcycles will be manufactured at Bajaj Auto’s Chakan plant near Pune, they will be sold only under the Triumph marquee through an exclusive retail network.
In November 2019, Mint had reported that the models produced under the alliance will only be part of Triumph range and that British bikemaker has developed an all-new engine platform with inputs from engineers at Bajaj Auto. The said engine platform will power several variants across the said engine displacement to cater to different riding applications.
The two companies had first announced their partnership in August 2017 with a plan to address the surging demand for mid-capacity motorcycles in India and several other emerging markets.
“Triumph will lead in all matters related to the brand. But when it comes to the product, including the development, production, engineering, purchasing, while a lot of that we will do together, Bajaj will look after the downstream activities. It takes to time to understand all that," said Rajiv Bajaj, managing director, Bajaj Auto Ltd, reasoning why the two companies took so long to formalize the arrangement.
Bajaj declined to give details on the revenue sharing arrangement between the companies. He also refused to comment about the potential investments that the two companies have planned for the joint development and production of the upcoming models.
“This is the first time that Triumph Motorcycles has entered into a partnership of this nature with any other vehicle manufacturer. This is our first major collaboration, it is crucial as it will help us expand globally and tap demand from younger buyers in emerging markets," said Triumph Motorcycles CEO, Nick Bloor.
“Our ambitions are best demonstrated by the price point announced today," Bloor added responding to Mint’s query on Triumph’s target volumes under alliance with Bajaj Auto.
“The appetite for premium bikes in India is only increasing for 200cc-800cc bikes, which stood close to one million units per annum in recent years. Bajaj Auto until now did not have any meaningful role to play in this lucrative segment. The sub-2 lakh rupee price point only underlines Bajaj Auto’s serious intent to make its mark in this growing category," said Aditya Jhawar, auto analyst, Investec Capital Services India Pvt Ltd underlining that the partnership will be incrementally positive for both the players.
Under the arrangement, Bajaj Auto will take over Triumph’s distribution network in India including existing employees. Triumph currently has a network of 12 dealerships and also operates a Manesar-based local assembly unit, which will remain operational in the future.