Swaraj Baggonkar Moneycontrol News
Bajaj Auto, India’s third largest two-wheeler manufacturer, is forging partnerships and opening design offices outside the country to boost exports and reduce its dependence on the highly competitive domestic market.
The Pune-based manufacturer of Pulsar and KTM range of motorcycles has drawn up plans that includes setting up of assembly units which would help it gain from lower taxation in these markets as compared to direct exports from India.
“We will have a marketing and sales office in Bangkok to address that region. We wish to have a design office there. We think Thailand is the centre of gravity for new two- and four-wheelers. We need to gauge the pulse of the market, so will have to place some of our own sales, design and R&D personnel there,” said Rajiv Bajaj, Managing Director, Bajaj Auto, at its recently held annual general meeting.
Earlier this year, Bajaj Auto joined hands with Motosikal Dan Enjin Nasional (Modena), where nearly a fifth of its equity is controlled by Japanese giant Kawasaki: its erstwhile long-time partner. Rajiv hopes to make Malaysia an entry base from where it can tap neighbouring markets.
“Of the significant milestones we have achieved, our partnership in Malaysia is the most important as it gives us access to a market where we sell motorcycles under our own brand. By virtue of this partnership, we will be able to localise up to 40 percent, which then makes us a local player. Through Malaysia, we can address so many markets in ASEAN,” Bajaj stated.
Motorcycle exports for Bajaj Auto grew 27 percent year-on-year to 7.11 lakh during April-August. Its three-wheeler exports jumped 65 percent to 1.7 lakh in the same period. Its share of three-wheeler exports stood at 50 percent.
Due to consistent growth in international reach and volumes, the company has been able to offset the weak volume trend back home. For instance, Bajaj’s domestic two-wheeler volumes fell 1.34 percent last year. However, exports grew 14 percent, accounting for 41 percent of its total two-wheeler production.
“We have to be a company that can make money, however little, by selling motorcycles in Africa. Yet at the same time, through our R&D and production, be a company that can sell in the US, Japan and Europe. This is a very wide spectrum. In Africa, we face competition from India and China, but see no competition from US and European players. In Europe, we face competition from US and European manufacturers, but face no competition from Chinese or Indian producers. One in three motorcycle today across the African continent is a Bajaj motorcycle,” he added.
In FY18, the company exported 789,000 vehicles representing 47 percent of its exports to developing markets such as Asia and Middle East. Another 840,000 went to emerging markets like Latin America, Sri Lanka and Bangladesh. In advanced markets such as US, Europe, Japan and Australia it sold 33,000 units.
From exporting almost nothing little over 10 years back, Bajaj said the company will be exporting 2 million units in FY19.
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