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Source : Money Control
What we have done essentially is to have a two-pronged approach towards the premium segment.
Rajiv Bajaj
MD
Bajaj Auto
It has been a nightmarish run for the overall automobile sector. The decline started with commercial vehicles followed by passenger car industry, which went through its worst phase in over 10 years.
The two-wheeler sector, which for the longest time bucked the trend, posted at least moderate growth. In such a market scenario, Bajaj Auto is adopting two-pronged approach.
Explaining the two-wheeler major's strategy, MD Rajiv Bajaj said models like the Ninja 300 and Ninja 650 cater to those looking for a super sport bike in the mid-engine range. "For those who are looking for something distinctive and different we have the Duke 200. In the next month or so it will be joined by a bigger sibling, the KTM Duke 390," he added.
Emphasising the need to cater to all stratas of the market inspite of the slowdown in demand, he said each brand is individually exclusive in terms of positions that they occupy, but collectively they present an exhaustive option to the consumer.
Bajaj offers a wide range of products from a Boxer or Discover all the way to a KTM and Husqvarna potentially making it a global motorcycle powerhouse. The company plans to enter the Indonesian market by the end of this year.
Two new Pulsars are slated for launch this year, one of which would be smaller than the Pulsar 200, and the other much bigger. This is expected to help it defend the company's leadership position in this space. But the main focus will be on Discover, he elaborated.
After the launch of the 100T model in January, sales have been good at 25,000 to 30,000 models per month, giving Bajaj a new foothold in the commuter segment. The company may launch six Discovers this fiscal.
Here is the edited transcript of the interview with CNBC-TV18
Q: This was your fourth offering along with Kawasaki, the Ninja 300. So do we understand that in the premium motorcycle segment you have covered all the segments that you want to be present in or are there still some categories where we might see future offerings by Kawasaki?
A:Q: As you have maintained for the longest time, you are very clear that you want to maintain the 20 percent EBITDA margin on all your products. Does it help at a time like this when there is an overall slowdown to also have premium niche products in the market?
A: I guess it depends on what we mean by help. Our journey as a motorcycle specialist towards becoming ultimately we hope, a global motorcycle powerhouse is going to be a long and hard journey.
Obviously, in terms of volumes, in terms of millions of motorcycle per year, this business has to come from our mainstream brands which are the Pulsar, Discover and Boxer. But it is very important that while we garner volumes and market share from there, as a specialist of motorcycle, we should have the wherewithal to put out any and every technology that can be associated with the motorcycle business.
I have never been one to believe that technology is something that you can simply buy off the shelf from some laboratory or some design house, somewhere - if does not work like that. So, how can a company that seeks to be the specialist of a certain area do something that is meaningful, in that, it keeps abreast with whatever is the latest in terms of technology and at the same time, does it in a business like manner?
So,I would say that towards that end, our relationship or our engagement with both, KTM and Kawasaki, I would say is akin to having a pilot car ahead of us. Here we are on a Pulsar and a Discover making this long journey to becoming a motorcycle powerhouse. But a little ahead of us, at the right distance, we are pacing a pilot car in the form of Kawasaki and KTM and that pilot car is actually defining the leading edge of technology, of performance, of quality, whatever is the latest and the best in the motorcycle world.
Therefore what Kawasaki and KTM do for us quantitatively is less important but what they do for us qualitatively is simply this that today, we are able to demonstrate with these motorcycles especially so with the KTMs which as you perhaps know are designed and manufactured by us for worldwide sale.
What this is demonstrating is that Bajaj, its suppliers and its dealers have the capability here and now to design, to develop, to manufacture, to sell and to service motorcycles which have every conceivable technology that is available today. Tomorrow, this technology as and when necessary could be brought to bear upon a Pulsar or a Discover. So that is the confidence that it gives all our stakeholders and that is why this pilot car is so important for our business.
Q: Given the fact that you have KTM, which has now gone and acquired Husqvarna. You have extended your alliance from merely a technology alliance with Kawasaki to a much bigger sort of an alliance. How will you look to differentiate the various brands that you have got? The fact is that you have a KTM Duke 200, you have a Pulsar 200. Can you share the nuances based on which you will differentiate one brand from the other?
A:Q: Where are you fitting in Husqvarna in all this?
A: Husqvarna is the peak of the KTM triangle at the top, because Husqvarna is the super-specialisation as far as off-road or motocross motorcycles are concerned and while it maybe very niche they have sales volume of no more than maybe 10,000 motorcycles a year. While Stefan Pierer would know this better, I would guess that that 10,000 is only going to become 20,000-30,000, it is never going to become 200,000 motorcycles a year. But it is very, very meaningful to that audience that wants a bike for a very, very specific and special propose.
So I think in this way you could say each brand is individually exclusive in terms of the positions that they occupy, but collectively they present an exhaustive option to the consumer. You can choose something all the way from a Boxer or Discover all the way to a KTM and Husqvarna and that is what potentially makes Bajaj a global motorcycle powerhouse.
Q: A word also on your alliance with Kawasaki. It has been a little over six months since you announced that. Give us an update. You mentioned a short while back that you would be entering the Indonesian market by the end of this year. Just talk us a little bit through your overall plans going forward.
A: We are to enter the market in the next few months. We reached an in-principle agreement with Kawasaki around March last year. In the last one year we have worked on three major aspects.
One, the ground in terms of distribution, because we have to align our channel with theirs, so there has been a lot of work that has gone on in terms of distribution, sales service etc and that is pretty much on schedule. We have also had to work on the product as I just said to make certain finer improvements. We have been doing that together and we have come more or less to the end of that.
The benefit of that work will be available on every Pulsar sold everywhere, not just on the Pulsar sold in Indonesia and finally we have to work on the brand and its position in the marketplace and that is the last little bit of work that is to be completed. We had said that approximately in the middle of this year we would go to Indonesia first with Pulsar 200NS and as of now we are on schedule to do that and we are very hopeful of a good result.
Q: There is a lot of competition now. TVS announced their alliance with BMW. They are expecting their first set of motorcycles to be launched in India by 2015. Many feel that their alliance is also loosely modelled on the alliance that you have with Kawasaki. How do you see competition because their motorcycles will be available in India by 2015? Overall, do you feel that this is also a sign of the Indian two-wheeler maturing?
A:Q: You are confident of maintaining your dominant position in the sports motorcycle category?
A:Q:
A: We have several launches lined up for this year. We have at least two new Pulsars. I can say this much - one will be smaller than Pulsar 200NS and one that will be much bigger. So I think that is going to help us defend our leadership of this space and that is very important for us so two new Pulsars in this year.
However, this year, our main focus will be on the Discover brand and Discover segment because I think after launching the Discover 100T in January of which we are able to already sell between 25,000-30,000 a month, this has given us a new foothold into the commuter segment because it is for the first time in our history that we are selling in large numbers a 100cc motorcycle which is a space more associated with Hero MotoCorp. We are selling large volumes of 100cc motorcycle wherein that motorcycle is the most expensive 100cc motorcycle in India today.
So this is telling us that if people are willing to shell out five percent more for the Discover 100T, perhaps they have come to accept that this is an outstanding 100cc motorcycle. If we have managed to create that excellence then the next logical step is to scale that excellence. What I mean by that is this - currently in the domestic market, we sell between 100,000-110,000 Discovers every month.
I would like to see that number grow significantly. When I say significantly, I mean to something that is over 150,000 a month. The Discover 100T provides us some answers as to how we could do that. So as of now, we have planned the launch of several new Discovers. In fact, I can say specifically that we have six Discovers that are being ready for launch for this financial year. We may or may not launch all six.
We will launch somewhere between four and six depending on the competitive situation because whether we like it or not. Often what we do depends on what our competition is so somewhere between four and six new Discovers. I am very hopeful and I am very keen that with that, we should see a 50 percent increase if not more in the sales of Discover which would then catapult Bajaj Motorcycle volumes to the next level.
What we have done essentially is to have a two-pronged approach towards the premium segment.
Rajiv Bajaj
MD
Bajaj Auto
It has been a nightmarish run for the overall automobile sector. The decline started with commercial vehicles followed by passenger car industry, which went through its worst phase in over 10 years.
The two-wheeler sector, which for the longest time bucked the trend, posted at least moderate growth. In such a market scenario, Bajaj Auto is adopting two-pronged approach.
Explaining the two-wheeler major's strategy, MD Rajiv Bajaj said models like the Ninja 300 and Ninja 650 cater to those looking for a super sport bike in the mid-engine range. "For those who are looking for something distinctive and different we have the Duke 200. In the next month or so it will be joined by a bigger sibling, the KTM Duke 390," he added.
Emphasising the need to cater to all stratas of the market inspite of the slowdown in demand, he said each brand is individually exclusive in terms of positions that they occupy, but collectively they present an exhaustive option to the consumer.
Bajaj offers a wide range of products from a Boxer or Discover all the way to a KTM and Husqvarna potentially making it a global motorcycle powerhouse. The company plans to enter the Indonesian market by the end of this year.
Two new Pulsars are slated for launch this year, one of which would be smaller than the Pulsar 200, and the other much bigger. This is expected to help it defend the company's leadership position in this space. But the main focus will be on Discover, he elaborated.
After the launch of the 100T model in January, sales have been good at 25,000 to 30,000 models per month, giving Bajaj a new foothold in the commuter segment. The company may launch six Discovers this fiscal.
Here is the edited transcript of the interview with CNBC-TV18
Q: This was your fourth offering along with Kawasaki, the Ninja 300. So do we understand that in the premium motorcycle segment you have covered all the segments that you want to be present in or are there still some categories where we might see future offerings by Kawasaki?
A:Q: As you have maintained for the longest time, you are very clear that you want to maintain the 20 percent EBITDA margin on all your products. Does it help at a time like this when there is an overall slowdown to also have premium niche products in the market?
A: I guess it depends on what we mean by help. Our journey as a motorcycle specialist towards becoming ultimately we hope, a global motorcycle powerhouse is going to be a long and hard journey.
Obviously, in terms of volumes, in terms of millions of motorcycle per year, this business has to come from our mainstream brands which are the Pulsar, Discover and Boxer. But it is very important that while we garner volumes and market share from there, as a specialist of motorcycle, we should have the wherewithal to put out any and every technology that can be associated with the motorcycle business.
I have never been one to believe that technology is something that you can simply buy off the shelf from some laboratory or some design house, somewhere - if does not work like that. So, how can a company that seeks to be the specialist of a certain area do something that is meaningful, in that, it keeps abreast with whatever is the latest in terms of technology and at the same time, does it in a business like manner?
So,I would say that towards that end, our relationship or our engagement with both, KTM and Kawasaki, I would say is akin to having a pilot car ahead of us. Here we are on a Pulsar and a Discover making this long journey to becoming a motorcycle powerhouse. But a little ahead of us, at the right distance, we are pacing a pilot car in the form of Kawasaki and KTM and that pilot car is actually defining the leading edge of technology, of performance, of quality, whatever is the latest and the best in the motorcycle world.
Therefore what Kawasaki and KTM do for us quantitatively is less important but what they do for us qualitatively is simply this that today, we are able to demonstrate with these motorcycles especially so with the KTMs which as you perhaps know are designed and manufactured by us for worldwide sale.
What this is demonstrating is that Bajaj, its suppliers and its dealers have the capability here and now to design, to develop, to manufacture, to sell and to service motorcycles which have every conceivable technology that is available today. Tomorrow, this technology as and when necessary could be brought to bear upon a Pulsar or a Discover. So that is the confidence that it gives all our stakeholders and that is why this pilot car is so important for our business.
Q: Given the fact that you have KTM, which has now gone and acquired Husqvarna. You have extended your alliance from merely a technology alliance with Kawasaki to a much bigger sort of an alliance. How will you look to differentiate the various brands that you have got? The fact is that you have a KTM Duke 200, you have a Pulsar 200. Can you share the nuances based on which you will differentiate one brand from the other?
A:Q: Where are you fitting in Husqvarna in all this?
A: Husqvarna is the peak of the KTM triangle at the top, because Husqvarna is the super-specialisation as far as off-road or motocross motorcycles are concerned and while it maybe very niche they have sales volume of no more than maybe 10,000 motorcycles a year. While Stefan Pierer would know this better, I would guess that that 10,000 is only going to become 20,000-30,000, it is never going to become 200,000 motorcycles a year. But it is very, very meaningful to that audience that wants a bike for a very, very specific and special propose.
So I think in this way you could say each brand is individually exclusive in terms of the positions that they occupy, but collectively they present an exhaustive option to the consumer. You can choose something all the way from a Boxer or Discover all the way to a KTM and Husqvarna and that is what potentially makes Bajaj a global motorcycle powerhouse.
Q: A word also on your alliance with Kawasaki. It has been a little over six months since you announced that. Give us an update. You mentioned a short while back that you would be entering the Indonesian market by the end of this year. Just talk us a little bit through your overall plans going forward.
A: We are to enter the market in the next few months. We reached an in-principle agreement with Kawasaki around March last year. In the last one year we have worked on three major aspects.
One, the ground in terms of distribution, because we have to align our channel with theirs, so there has been a lot of work that has gone on in terms of distribution, sales service etc and that is pretty much on schedule. We have also had to work on the product as I just said to make certain finer improvements. We have been doing that together and we have come more or less to the end of that.
The benefit of that work will be available on every Pulsar sold everywhere, not just on the Pulsar sold in Indonesia and finally we have to work on the brand and its position in the marketplace and that is the last little bit of work that is to be completed. We had said that approximately in the middle of this year we would go to Indonesia first with Pulsar 200NS and as of now we are on schedule to do that and we are very hopeful of a good result.
Q: There is a lot of competition now. TVS announced their alliance with BMW. They are expecting their first set of motorcycles to be launched in India by 2015. Many feel that their alliance is also loosely modelled on the alliance that you have with Kawasaki. How do you see competition because their motorcycles will be available in India by 2015? Overall, do you feel that this is also a sign of the Indian two-wheeler maturing?
A:Q: You are confident of maintaining your dominant position in the sports motorcycle category?
A:Q:
A: We have several launches lined up for this year. We have at least two new Pulsars. I can say this much - one will be smaller than Pulsar 200NS and one that will be much bigger. So I think that is going to help us defend our leadership of this space and that is very important for us so two new Pulsars in this year.
However, this year, our main focus will be on the Discover brand and Discover segment because I think after launching the Discover 100T in January of which we are able to already sell between 25,000-30,000 a month, this has given us a new foothold into the commuter segment because it is for the first time in our history that we are selling in large numbers a 100cc motorcycle which is a space more associated with Hero MotoCorp. We are selling large volumes of 100cc motorcycle wherein that motorcycle is the most expensive 100cc motorcycle in India today.
So this is telling us that if people are willing to shell out five percent more for the Discover 100T, perhaps they have come to accept that this is an outstanding 100cc motorcycle. If we have managed to create that excellence then the next logical step is to scale that excellence. What I mean by that is this - currently in the domestic market, we sell between 100,000-110,000 Discovers every month.
I would like to see that number grow significantly. When I say significantly, I mean to something that is over 150,000 a month. The Discover 100T provides us some answers as to how we could do that. So as of now, we have planned the launch of several new Discovers. In fact, I can say specifically that we have six Discovers that are being ready for launch for this financial year. We may or may not launch all six.
We will launch somewhere between four and six depending on the competitive situation because whether we like it or not. Often what we do depends on what our competition is so somewhere between four and six new Discovers. I am very hopeful and I am very keen that with that, we should see a 50 percent increase if not more in the sales of Discover which would then catapult Bajaj Motorcycle volumes to the next level.
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