Bajaj Auto to launch XCD 135 on Jan 21

Bajaj Auto has had a tough fiscal so far, with sales volume dropping by 8%. But it is hoping that 2009 will be a better year with a slew of new launches, which it hopes will script a turnaround for the company. The first one will roll out on January 21.

 

Here is a verbatim transcript of Sumantra Barooah's comments on CNBC-TV18. Also watch the accompanying video.

 

Bajaj Auto has a strong plan on paper to script and turn around the volumes; it will start itself with XCD 135 cc, which will be positioned in the mid segment of the Indian Motorcycle market, which contributes to about 55% of the entire volumes.

 

Bajaj auto is faced with a peculiar problem. It is a leader in the premium segment, which is bikes like Pulsar and above and at the entry level segment its again the leader but in the mid segment which contributes about 55% of the industry's total volumes, its struggling in that segment for years now.

 

In that segment Hero Honda is the leader and this Bajaj XCD 135 is targeted right against Hero Honda's market leader bikes in that segment. So, Bajaj is going all out to make this product a success because the first product in the XCD range, which was launched in September 2007, couldn't live up to the expectations of the company and of the analysts.

 

It is clocking average of about 20,000 units per month according to the company officials, but this new one is expected to give the XCD brand a bit more boost and the overall volume that the company is looking at. But having said that, the other five products which will follow the XCD 135 are also equally crucial if not more, because two of those products will fall in this mid segment and three of them in the premium segment.

 

Commenting on the same, Rajiv Bajaj, MD, Bajaj Auto said that in this fiscal the volumes will be in negative territory in the entire two wheeler industry and also from Bajaj Auto.  He also said that once he rolls out all the bikes, perhaps by September also we can expect to see a year on year growth in their monthly volumes.

 

He said, "This should happen during the course of this calendar year 2009 for sure, because in my view we are going to launch six new products and obviously we hope that led primarily by this product offensive, we will be able to turnaround our volumes.

 

Half the products we launch this year will be aimed at the mid-segment and half of them to different - our leadership position is in the premium segment. So on this basis, since these products will be launched between now and September, I would say that from the second-half of this calendar year we should start exceeding last year."   

 

Demand-Supply mechanism:

 

The repeat purchase, which was the significant chunk of the entire industry volumes, has fallen down, but the first time purchase is still there, the demand is still there. However, there is no credit available in the market for the first buyers to get money and buy the product, because we have seen the case of many banks, they have got a huge pileup of bad loans and they are withdrawing from many geographies to avoid further aggravating that problem. So, the demand is there as far as first time buyer is concerned but credit crunch is the main problem.