The two companies have held several rounds of discussions and all considerations have been taken care off. A dialogue has started on manufacturing and R&D
After a two-year-long deliberation on sharing of development work of next generation mid-capacity bikes, Bajaj Auto and British bike manufacturer Triumph will sign a formal contract by Q3 FY20.
The two companies have held several rounds of discussions and all considerations have been taken care off, a top Bajaj Auto executive told Moneycontrol. He added that a dialogue has also started on manufacturing and research and development (R&D).
Rakesh Sharma, Executive Director, Bajaj Auto, said, “All the principles of engagement (between Bajaj Auto and Triumph) have all been satisfactorily and amicably resolved. These are now embedded in a formal contract, which is in its last stages of preparation. But even as this is happening, there is a good degree of discussion on the manufacturing and R&D side already.”
When asked if the contract between the two companies could be signed before September-end, Sharma said, “It could spill over (to Q3), but there is nothing left to debate in it. It is just a matter of transcribing the principles into a (formal) language.”
In August 2017, Bajaj Auto and Triumph jointly announced their intention to build mid-capacity motorcycles for India and the global market. This non-equity partnership will look to address growing demand for leisure riding, something on the lines offered by Harley Davidson.
With Bajaj Auto’s low-cost expertise, the partnership will address budget segment buyers looking for bikes with engine capacity between 400cc and 800cc. With development work on the bikes expected to begin this year, it will take at least two years before the two firms are ready to roll out their new range.
In 2018, Triumph clocked sales of 64,752 through a network of 700 dealers across the world, including India. In the first six months of 2019, the Brit brand sold 2.6 percent more bikes at 38,740 units compared to the same period last year.
At 117 years, Triumph Motorcycles is one of world’s oldest bike brands.
Triumph has an assembly facility based in Manesar, Haryana. It sells 13 models in India, with engine capacity ranging from 800 to 1,200cc, in the price band of Rs 7.45 lakh to Rs 20 lakh. The company witnessed 24 percent decline in domestic volumes to 978 units.
A few years ago Bajaj Auto severed ties with its long-time Japanese partner Kawasaki, who was also its technology partner since mid-1990’s. Kawasaki decided to go solo after KTM and Bajaj significantly widened their partnership.
The arrangement proposed with Triumph is of similar nature to that of Austria-based KTM. However, a major difference is that that Bajaj holds 48 percent share in KTM, but there will be no equity play in the Bajaj-Triumph deal.
Under the KTM alliance, Bajaj developed a range of low-capacity street bikes having engine capacities ranging from 125cc to 390cc, but priced significantly higher than similar Bajaj products. These KTM bikes, which are manufactured at Chakan, Pune, are sold in the US, Europe and Japan, besides being sold in India.Bajaj’s Chakan plant will progressively produce four different brands -- KTM, Husqvarna, Triumph and Bajaj. While Bajaj will play in the entry segment, KTM and Husqvarna will be present in the 200cc and above segment and. Triumph in the segment above that.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.