Bajaj Auto’s Freedom 125, which incidentally is the world’s first motorcycle that uses compressed natural gas (CNG) as a fuel, is attracting buyers cutting across segments. During a call with analysts, a senior company official said that the CNG offering is finding takers from mileage-conscious, entry-level two-wheeler buyers as well as 150cc segment customers.
“We have understood that the spectrum of customers who have bought Freedom is very wide. The largest cohort is from the 125cc segment itself, but that is only 15-20 percent of sales,” Rakesh Sharma, executive director, Bajaj Auto, said in a post second-quarter earnings call.
The Freedom 125, which is available at a starting price of Rs 95,000 (ex-showroom, pan-India), runs 102 km per kg of CNG, which would result in a range of approximately 200 km on one full tank of CNG. It also comes with an auxiliary 2-litre petrol tank that adds over 130 km to the range in case the CNG tank empties, according to the company.
“The product is even attracting 150cc motorcycle buyers, apart from 100cc entry level ones. So it's very, very wide and, in a way, is very interesting and encouraging for us, because it is telling us that the sources of business cut across the conventional segments," added Sharma.
The Rajiv Bajaj-led company has retailed over 10,000 Freedoms since its launch till September, and is aiming to hit about 18,000-plus in October. The company is also doubling its output to 30,000 units per month in the third and to 40,000 per month in the fourth quarter of this fiscal.
“We're very encouraged that other manufacturers have announced plans to introduce CNG-powered two-wheelers. This will only support the development of the CNG infrastructure and perhaps help argue the case for a lower GST (goods and services tax) on CNG-powered two-wheelers, along with other alternative fuels like ethanol and CBG (compressed biogas),” Sharma added.
Without sharing any sales target for the Freedom, Sharma indicated that the total "addressable market" for this model is 50,000 units per month.
“Assuming that the CNG network in 355 towns and cities accounts for about 70 percent of the total (two-wheeler) market. In a sense, you can say that the addressable market is almost half of the mileage-conscious motorcycle customer, which amounts to about half a million units (per month) without taking into account even scooters,” said Sharma.
The Bajaj Auto ED affirmed that it has also received very good support from gas distribution companies that are trying to ensure a good customer experience at the CNG filling stations.
“I don't think gas distribution companies will shy away from putting in more dispensing stations and ensuring that the two-wheeler CNG customer doesn't require to wait longer for fuel refilling,” noted Sharma.
Bajaj Auto clarified that focused right now as they are on investing to grow the CNG bike business, margins are not a top priority.
“At this point of time, we are clearly making an investment behind growing the Freedom franchise. So the margins are not clearly close to where the rest of the motorcycle portfolio might be. It's a very conscious decision that we've taken to drive this product,” Dinesh Thapar, the chief financial officer, said in the same conference call with analysts.
To a query on a 100cc version of its CNG bike, Sharma said the immediate focus is on the current model, which will be offered in three variants.
“The platform allows us to expand both into the 150cc and the 100cc zone. But for the moment, given the kind of requirements we have and the capacity and the supply-demand balance, we are focusing on the three models which we have, of which two have been rolled out, and the third one is getting into the system. So we'll focus on that and saturate the market with these three variants in the initial phase,” Sharma said.
Moneycontrol reported on August 27 that Bajaj Auto would launch the 100cc version of its Freedom model that will take on Hero MotoCorp’s best-selling 100cc Splendor+.
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