Double-digit growth was norm until inimical factors hit sector: Rajiv Bajaj

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Bajaj Auto’s strategy to diversify and enter new markets overseas seems to have paid off. In an interview with ET, Bajaj Auto MD Rajiv Bajaj said that to de-risk, the company needs to be global and agile. Bajaj said double-digit growth was generally the norm until the industry ran into a host of “inimical factors” in the last 18 months. Bajaj Auto chose to be global, despite India being the largest two-wheeler market in the world, as it had no control over local factors. Edited excerpts:

Bajaj Auto continues to drive the premium motorcycle business in India, with KTM, Husqvarna and, very soon, Triumph. What is your broader vision for the premium bike division?

We partnered KTM in 2007 with the belief that we could combine their brand strength and distribution in developed markets with our competitive operations and distribution in emerging markets to define a new business model. It has been an extremely potent thesis that has made KTM the world’s No.1 premium motorcycle brand by volume in a matter of years. We believe that we can repeat this success with Husqvarna and Triumph.

How does the alliance among Bajaj, KTM,Husqvarna and Triumph play out on the global stage?

Our strategy was to build Bajaj as the most complete and versatile motorcycle maker in the world, and these partnerships have been crucial bricks in that wall. Today, we are the only motorcycle maker that has significant market presence across the world, with a portfolio ranging from a hardy Boxer in Africa, which we export for as little as $400, to a race spec KTM 390 which is sold across US, Europe and Japan for €6,000. The understanding that enables us to bring to bear upon each brand exactly that combination of technology design quality and cost that is right for it, is what differentiates us.

The company’s market share in India remains at 12-14%, and in the motorcycle business, it has increased to 18%. Are you expecting an upside in market share?

We compete in over 70 markets globally with our motorcycles and three-wheelers. In most markets, we are No. 1 or 2. In India, too, we are a strong No. 2 in motorcycles with about 20% share, and a clear No. 1 in three-wheelers with about 57% share. We would obviously like to improve our performance across all our markets. But unlike most other Indian auto companies whose sales are largely restricted to India, we’re not over obsessed by any one market.

The compounded annual growth rate of the two-wheeler market has been 6-7% in the last five years. Is it too low?
Double-digit growth was generally the norm until the industry ran into a host of inimical factors in the last 18 months. Organisations like Bajaj Auto have no control on these, and this is exactly why we chose to be global, despite India being the largest two-wheeler market in the world.

Your view on ease of doing business here?

In the last 29 years, my experience has been that from technology induction to labour relations, the only things that have gotten better are the ones that we have worked at to help ourselves. The system within which we operate remains largely the same in most respects.

The industry is expected to post a steep decline. When do you expect the market to get back to normalcy?

What we need to do to de-risk ourselves is to be global and agile.

How does Bajaj plan to tackle slowdown, likely price increase on account of BS VI?

The short answer is smart innovation. In the sub-150cc commuter segment, we have stirred demand by adding value to deliver a lot more product for a little more money. In the 150cc+ sport segment, we have launched almost a dozen new products in a manner that keeps the aspiration but makes it more affordable. This is why we have recorded a lower de-growth than the industry and have consequently grown share.

Will the 100 cc entry bike segment continue to play a pivotal role, despite steep price increase expected in BS VI?

About half of our global sales of 5 million vehicles is represented by such affordable, efficient and reliable motorcycles in the brands boxer CT and Platina. That’s not going anywhere in a hurry.

via ET

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