Moneycontrol
Apr 19, 2017 03:05 PM IST | Source: Moneycontrol.com

Bajaj Auto plans assembly line in Malaysia through JV with Modena

Bajaj Auto is discussing with Motosikal Dan Enjin Nasional (Modena) for producing its range of bikes, including the latest Dominar brand, in an attempt to reduce dependence on the troubled African markets.

 
 
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Bajaj Auto, the country’s biggest two and three-wheeler exporter, is in advanced talks with a Malaysian company for setting up a dedicated assembly line in that country.

Bajaj Auto is holding discussions with Motosikal Dan Enjin Nasional (Modena) for producing its range of bikes, including the latest Dominar brand, in an attempt to reduce dependence on the troubled African markets.

Speaking to Moneycontrol Rajiv Bajaj, Managing Director, Bajaj Auto (BAL) said, "It's true that we are discussing a partnership with them (Modena)…..it's very likely to happen".

Nearly a fifth of the equity of Modena is controlled by Japanese giant Kawasaki, the erstwhile long-time partners of Bajaj Auto, which launched several bikes in India with the Pune-based company.

Mirage White

The Malaysian company presently does not have any motorcycles in its line-up. It produces and sells step-throughs (a clutch-free geared two-wheeler) mostly in Malaysia through its plant in Gurun, Kedah which as an annual capacity of 130,000 units.

In addition to the 400cc Dominar, Bajaj’s biggest bike presently on sale, the company would launch the Pulsar brand along with the Platina in the Malaysian market. Bajaj’s decade-old Austrian partner KTM is already present in that market.

The focus on Malaysia is part of Bajaj's efforts to capture a bigger pie of the Asean market, which is presently dominated by the expensive range from the Japanese companies.

In January this year the company reentered the Indonesian market but this time riding pillion with KTM. After a robust response for the India-made, European bikes, Bajaj believes that KTM can generate sales of 5,000-10,000 units a year in Indonesia.

Bajaj, India’s most profitable two-wheeler maker, had earlier entered Indonesia in 2005 but could not generate profits despite several attempts. In an earlier interview to Moneycontrol Bajaj said that going forward Malaysia and Thailand would become key markets for the company.

"We have also restarted promisingly in Indonesia, doing better than ever in Philippines, kicked off Myanmar and close to closing up in Thailand", added Bajaj.

Nearly 40 percent of Bajaj’s total sales came from exports last financial year forming a crucial part of revenue and profit margin. The company clocked export sales of 1.21 million units last year from a total sales of 3.21 million units.

However, there was a drop of 16 percent in exports as against the total exports of 1.45 million units clocked last financial year which was mainly on account of a drop in volumes in Nigeria, Iran, Egypt, Sri Lanka and Columbia. As much as 45 percent of total exports by Bajaj Auto is to Africa alone.

Here is a more detailed plan of the company for the Asean countries

Philippines

BAL has an over 10 year collaboration with Kawasaki Motors Philippines (a subsidiary of Kawasaki Heavy Industries Japan) through which KMPC assembles, distributes and services Bajaj motorcycles across Philippines. The partnership has been highly successful and enjoys a clear No 2 position in the motorcycle segment. Beyond market share, the partnership has led the very development of personal motorcycling in Philippines. New products are being developed by Bajaj based on inputs by KMPC to expand its share and strengthen its competitive position there. The BAL –KMPC partnership is together targeting leadership position in Philippines.

Indonesia

In keeping with the opportunity BAL & KTM have decided to target the premium end of the motorcycle opportunity in Indonesia through the development of the KTM business there. In view of BAL’s previous experience in Indonesia, it has been agreed that BAL will develop the KTM business in Indonesia. Start of sales commenced in January 2017. Progressively BAL will build a dedicated network of exclusive KTM dealers and bring the high quality KTM experience to Indonesian customers. In due course a CKD based operation is proposed to be established.

Malaysia

BAL has appointed MODENAS of Malaysia as its Distributor for Bajaj range of motorcycles in Malaysia. MODENAS will import CKD kits, assemble, distribute and service premier Bajaj brands like Dominar, Pulsar and V. All approvals and operations are already in position and sales are expected to commence in May 2017. This partnership will not only build the Bajaj brand in Malaysia but is also exploring opportunities for localization to enable access to other ASEAN markets.

Thailand

BAL is in advanced stage of discussion with a local Thai organization for representing BAL in Thailand. With this partnership BAL will introduce its high end brands of Dominar and Pulsar in Thailand. It is expected to conclude the arrangements by May 2017 and commence sales in Thailand by October 2017.

 
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