Moneycontrol
Get App
Last Updated : Jan 06, 2015 10:16 AM IST | Source: Moneycontrol.com

Has Bajaj Auto owned up to its strategic mistakes?

With its market share falling from a consistent 24 percent a few years back to 18 percent now, it appears Bajaj Auto has decided to tweak its earlier strategy of focusing on select models.

 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Moneycontrol Bureau


With its market share falling from a consistent 24 percent a few years back to 18 percent now, it appears Bajaj Auto has decided to tweak its earlier strategy of focusing on select models.


From being the number two two-wheeler maker in the country, Bajaj first saw Honda overtake it a few years back, followed by TVS last year. This, analysts say, was brought about thanks to company making some crucial mistakes – such as exiting the scooter segment, not focusing on the commuter bike segment (in a bid to boost profitability) as well as focus on few brands such as the Discover.

Close

The company has now decided it would launch two new models in the commuter segment, which accounts for about two-thirds of the market, in the first half of this year.


The move comes on the heels of its Platina being overtaken by Honda’s Dream series last year even as Hero’s Splendor and Passion continue to rule the roost. TVS Star twins to have notched up steady sales.


Bajaj Auto MD Rajiv Bajaj termed the company’s decision to create new brands instead of focusing on existing ones may come from the fact that the company continues to face criticism from analysts and investors – Bajaj’s share price underperformed peers over 2014 – and as the company’s oft-used defence of being the most profitable and the country’s biggest exporter clearly fails to convince them.


Speaking to Mint, Bajaj said strategy was “a matter of adapting to changes in the market place” and that his company made strategy on five- or 10-year bases.


But as the same Mint piece points out, its strategy has been anything but consistent. For instance, one its key models, Discover, has been launched in the 100cc, 110cc, 125cc, 135cc and 150cc segments (in many cases, each segment had multiple variants).


This has led to the Discover, while being a successful model, not giving returns commensurate with the amount of effort Bajaj has put in it. The Pulsar, too, has been launched in both 150cc and 135cc segments.


A recent report in the Business Standard says, as part of its new strategy, Bajaj has broken down the market into six segments and will target each with specific models.


A crack at Royal Enfield’s fast-growing cruiser segment is also intended, the report says.


With Bajaj aiming to roll back its strategy of focusing on few models as well as on the premium end of the market, the third link in its market share loss story – the exit from the scooter business that it once dominated single-handedly – remains.


Towards that, Mint quotes Rajiv Bajaj as telling his executives: “You could not do well in the area you have been present (entry-level motorcycles), it’s wishful thinking that you would be able to do well in an area in which you are not present.” He was further quoted as saying that the company would make a comeback in the scooter market when it has a model with strong differentiators.

Even that is a clear departure from Bajaj’s earlier stated line: that scooters did not fit in its global expansion strategy.



Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Jan 5, 2015 06:28 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant