Dominar price logical; may not impact Enfield volumes: Bajaj

Rajiv Bajaj, Managing Director at Bajaj Auto is very upbeat on increasing market share with the launch of the new 400cc bike ‘Dominar’. He is confident of selling 2 lakh bikes per year.Although the launch of the bike was delayed by few months they wanted to be spot-on and wanted to perfect the act before coming out into the market, said Bajaj in an interview to CNBC-TV18.The company today launched its latest sports bike Dominar 400 priced up to Rs 1.5 lakh (ex-showroom Delhi) with an eye on a 20 percent market share in the premium luxury segment.Dominar 400 is powered by a 373cc engine and will be available with ABS and disc brake versions. The variants are priced at Rs 1.36 and Rs 1.5 lakh.He does not believe the bike is priced aggressively, in fact said the price is 'logical' for a product like Dominar.Talking about competition with Royal Enfield, he said both the players will be able to control around 60 percent of market share in the sports segment and does not think Dominar would be any adverse impact on the competition.Sales for the company in the month of November were down 13 percent year-on-year but December sales would be at par, said Bajaj.Bajaj is hopeful of clocking sales growth in January-March 2107 and expects to do better than the industry on back of new launches and product mix.Below is the transcript of Rajiv Bajaj’s interview to Sonia Shenoy and Anuj Sighal on CNBC-TV18. Sonia: Finally, this baby has been delivered and quite aggressive in terms of pricing: Rs 1.36 lakh, not bad. Are you confident of doing 15,000 units, something that you spoke about in the press conference because there is a big cash crunch at the moment? A: Yes, it has certainly taken its time coming. It is no secret that the launch was originally to be a few months ago. But, we wanted to get it absolutely spot on because it is a very high stakes segment. Consumers expect nothing but the best and there is a very tall leader there in the marketplace. So, we took a few months for perfecting our act. I would not say the price is aggressive. The market has been calibrated by bigger motorcycles from global manufacturers. A 750 cc motorcycle cost Rs 5 lakh. I was saying that in my view the price is actually logical because why should a 750 cc motorcycle, for example, cost Rs 6 lakh when a Rs 800 cc car costs Rs 2 lakh. I could never figure that out. Fortunately for me, my engineers figured it out and they put together a wonderful motorcycle. In terms of volumes, this segment is close to 8,00,000-8,50,000 motorcycles a year already and I would hazard that since it continues to grow despite all the pressures in the environment, this is a segment that is soon going to be a million motorcycles a year. And it is pretty much a one horse race right now as we all know. So, if we have the product right, we can reasonably expect 20 percent of the market and that would be 2,00,000 motorcycles a year, 16,000 a month. Of course, we will export also. So, between domestic and export markets, 2,00,000 is good. Anuj: So, have you got a call from your brother, Siddhartha, about the first looks of the bike? A: I would imagine he is speechless right now, but more seriously, I am very proud of the fact that Bajaj and Royal Enfield together control or represent 60 percent of the share in the sports segment. That is something that every Indian should be proud of. It is not something that you see in the car industry, for example, that two Indian companies control 60 percent of the premium end of the market. And weare of course, global company. We are going to take this bike global as soon as we can. Siddhartha is trying to do the rest. So, all over the world, people will have two choices now in the mid-weight category. You can either ride a Bullet, or if you want to go faster than a Bullet, you can get a Dominar. Anuj: You get a sense that this will expand the market? Both Royal Enfield will do well and your company, your bike will also do well, we are in that kind of a market? A: I 100 percent believe so. It is not for me to say, but I do not think this is going to have any adverse impact on Enfield volumes. I will tell you very logically why. Enfield stands for one kind of a motorcycle. You might call it outdated. You might say classic, you might say slow, you might say heavy, whatever you want to call it. The Dominar, in every sense, is the opposite. It is modern, it is high-tech, it is fast, it is nimble, it is sharp. So, what I am trying to say is that in every segment, you always get the largest number of consumers at the two extremes of the segment. I think Royal Enfield has a bunch of guys at one end of the segment who want all those attributes that Royal Enfield so beautifully delivers. There are a lot of people that can afford to pay Rs 1.5 lakh but do not want, in my words, a sumo wrestler. They are looking for a heavy weight boxer and that is what Dominar is. So, all those people who had the money but were not inspired by Royal Enfield are suddenly going to move up, having bought a Pulsar repeatedly or some other bike in that segment over and over again, they are going to move up. This is segment is definitely going to grow. Sonia: Anuj is very excited to buy the bike, to lay his hands, but unfortunately, his family, his wife has banned him from touching motorbikes. So, what would your advice be for Anuj because he is really dying to ride a bike? A: I would say to him, if he wants one, he should book one right away while it is still available. And if his wife does not like it, please buy it and get rid of your wife at the same time. Two birds with one stone. Sonia: What about market growth in the second half of the year because you have done very well in the first half. It is almost a 20 percent growth in the domestic motorcycles segment and now, you are sitting at almost 11.5 lakh in the first half of the year. With the Dominar coming on board and suppose you even do 10,000 units per month, what are we looking at overall in domestic volume growth in the second half? A: Very hard to say. As you know, given the current situation, we have to live month-on-month. Having said that, in November, after a good first half, as you mentioned, we were down about 13 percent or so. I would like to think that we can be almost square in December. So, December 2016 should be on par or almost on par with December, last year. Why? I am speaking for Bajaj, not for the industry, because we already have the new V12 in the market, we have the 2017 Pulsars in the market, and now we have Dominar going into the market. January to March, I would like to believe that we can clock some growth. But it would be a very brave man who would hazard a guess at this point of time. The reason I cannot say so with complete confidence is because with the Dominar, we have a new platform of engine and vehicle. It will take us tome to build up volumes. Something like 10,000 a month is not something we can hit within March, I do not think so. It will take us time to do that. But I am still somewhat confident that with the new Platina, new V and new Pulsars there, we should be better off than the industry. This is what I would like to believe. Anuj: Last time, you told us that you do not have a good picture for exports. You had a better picture, but not a good picture. Has that changed? Can you sense some bit of improvement? A: I can say this. One, the picture, though not great, is quite stable now between 90,0000 and 1,00,000 motorcycles a month and about 15,000 plus minus three-wheelers every month. So, that is one. And as has been the case for the last 18 months or so, month-on-month, something goes up, something goes down. As Ravi told you last week, Nigeria was nicely up in the month of November, but then Sri Lanka took a beating on duties and Egypt on the pound going haywire completely. So the situation still dramatically volatile. Going forward, I can say this basis out confidence, we had all our international distributors here on November 29. We had a three-day conference and my understanding from that is that in a way, the worst, everybody hopes, is behind us. Everybody is looking forward to growth, partly driven by all these new models we are introducing. And there is also a positive sense in terms of the product mix. It is not secret that the rupee is also getting weaker. And if you look at it versus last year, maybe by 3 percent or 4 percent. And in the next financial year, I would assume that even if Bajaj volumes and exports do not change dramatically, I expect to see a much greater component of Vs, Pulsars, Avengers, KTMs and of course, Dominars. So, qualitatively, it should be very good for us.