Automatic Scooters: All that Bajaj Need

Bajaj Auto Ltd. recently lost its position as second largest two-wheeler manufacturer in the Indian auto market, after a long regime. In July 2013, Honda Motorcycle and Scooter India Ltd. overtook Bajaj in terms of overall sales and became the second largest player in India. What could be the reasons behind that? Well, there are several, but the biggest reason is Bajaj's absence in ever increasing automatic scooter market.

Let's have a look at the sales figures of both the companies in August 2013. HMSI's overall sales were at 3.09 lakh units, while Bajaj Auto were at 2.78 lakh units. Which means HMSI sold 30,349 units more than Bajaj. However, Bajaj's overall two-wheeler sales solely comes from the motorcycle segment, while HMSI's has around 50 percent share from the scooter segment. HMSI sold 1,56,629 units of motorbikes in August 2013, which is whole 1,21,954 units lesser than Bajaj in Motorbike segment. Apart from Honda, other major two-wheeler manufactures in India like Hero MotoCorp and TVS are also receiving a good share from their respective scooter segment in their overall sales. Yamaha Motors has also entered in the segment with Ray and Ray Z in India, which are getting a good response. All these figures show that if Bajaj launches one or two automatic scooters and manage to sell 35,000 units per month, it can overtake the HMSI and take their position back. Now the question is, why Bajaj is not launching any product in the rising segment of the Indian market? 

In an interaction with Antique Stock Broking in June, Bajaj Auto's MD, Rajiv Bajaj said, "Let me start by saying that in the fast-food industry, there are people who make burgers and there are people who make pizzas. If I were McDonalds, and if I were to observe that a lot of consumers have started going to Pizza Hut, I have two choices - either I also make pizzas, which, in my view, would be wrong. Or, I make more interesting burgers. So I think we would choose the second option,".

"We are not saying to ourselves that we will never make scooters. All we can say is that, at this point of time, when the overall market is of 35 million motorcycles, we are only making 3.5 million motorcycles. When you have 10% share of something, it is silly to look at something else," he added. This shows that Bajaj still maintains the company will remain focussed on selling profitable motorcycles. The company is also focusing on their export market for expanding their global market shares. They are giving priority to the production of KTM motorcycles and Pulsar 200NS for export, while producing bikes for domestic sales is their second priority.

Bajaj started its career from the legendary Italian Vespa scooter, then came the company's own successful range of scooters including Priya, Super and Chetak. If we go a few years back the company had a range of automatic scooters also including Spirit, Wave, Kristal etc. So if the company launches automatic scooter range, it will not look like they are copying other manufacturers. And as mentioned above, even if they succeed to sell out around 20-25% scooter units compared to the scooter units sold by HMSI, they will be back to the second position.

So, these strategies aren't working well for the company, as the outcome is decreasing sales. For now it only looks impractical that Bajaj will regain its lost ground riding only on bikes, however some truly good products can change the game. One such product is the much anticipated Bajaj Pulsar 375.