Royal Enfield's headstart, exports and the domestic market for Bajaj Auto: Rajiv Bajaj interview
Bajaj Auto has been in the news recently for its brand-new alliance with Triumph that is expected to post a massive threat to Royal Enfield in times to come. Bajaj Auto has also made news for its falling sales, trouble in the export markets and more. Rajiv Bajaj, MD, Bajaj Auto spoke to LiveMint in detail, we have a few excerpts.
The Triumph-Bajaj alliance, history
Rajiv Bajaj: In 2007, I contacted both KTM and Triumph at around the same time. He [John Bloor, chairman, Bloor Holdings which owns Triumph] just told me, "I like you and will come to you at an appropriate time." I thought it was a polite way of saying no. I must give him full credit. After 10 years, he did not contact anybody else. This is called ethics and value. Then it took us just six months to finalise the partnership.
Bajaj Auto's falling market share
Rajiv Bajaj: But we were hit by two things - first was the transition from BS-III (Bharat Stage-III) to BS-IV (Bharat Stage-IV). We did the right thing by having the more expensive BS-IV range ahead of time. It is estimated that in the last three days of March - between Honda Motorcycle and Scooter India Pvt. Ltd, Hero MotoCorp Ltd and TVS Motor Co. Ltd, they had put in 800,000 motorcycles in the market and offered huge discounts. Suddenly, if you put 800,000 vehicles in the market - which is a month's sales - in just three days, at a discounted price, people will advance purchase. That is why our sales, from April till now has been falling. To put it simply, they spent hundreds of crore in the last quarters of fiscal 2016-17 to buy market share for first quarter of this year. If I spend the same amount, I can also show sales, but the question is whether your priority is sales or profits. Therefore, because of these factors, we have again slid from 20% to 16% (in market share).
Rajiv Bajaj: Bajaj has suffered the most in exports as we export 40 per cent of what we make and there has been some problem or the other in every other export market including Sri Lanka, Egypt, Bangladesh, Columbia, most of Africa, Nigeria for the last couple of years. From August onwards, we are seeing volumes pick up. If it continues, and we are hoping it will, we should soon reach the level of 1.7 million-mark very soon.
Bajaj Dominar 400 sales flattening out?
The Bajaj Dominar 400 currently sells 4,000 units a month and Rajiv Bajaj expects the volumes to reach the 7,000 mark soon
Rajiv Bajaj: Our target was to do 10,000 units a month within the first year of launch; we are still four months away from that. The targets we give are always inclusive of exports. We should be reaching 6,000-7000 units a month very soon. In that segment, with that price point where Honda has failed, TVS has not entered, and Royal Enfield has huge headstart over us. Being a new brand, if we are already at 4,000 plus and will soon be able to sell 6,000 to 7,000 units a month. That's the number Enfield was doing five years back. That means, if they have a 50-year history I would say, we have caught up with 45 years in one year's time.
Don't forget to read the interview in full at Livemint.com. There are more details on each of these topics as well Bajaj's comments on other aspects of his business.
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