An Indian company and its domestic manufacturing hub may give the world a new leader in premium bikes. Two of five motorcycles sold by street bike specialist KTM AG this year will be made by Bajaj Auto’s Chakan facility, a strategy that the Rajiv Bajaj-led firm expects to help the Austrian company beat leader Harley-Davidson in the premium bikes segment globally.
“KTM hopes to end at 270,000 (units sales) and it will beat Harley-Davidson worldwide in premium motorcycles. And out of 270,000, about 100,000 motorcycles will be made at our Chakan plant," Rajiv Bajaj, managing director, Bajaj Auto said.
Harley-Davidson, whose sales have been flagging since 2013, is targeting sales of 231,000-236,000 during this year — an on-year drop of 2-4 percent. At 270,000 units sales, KTM will clock an on-year 13 percent growth.
Bajaj Auto-KTM rise
When Bajaj Auto acquired 14.5 percent in KTM AG in 2007, the European company clocked annual sales of 65,000 units. At that time Harley-Davidson’s annual sales stood slightly over 300,000 units. Over the last 10 years, Bajaj hiked its stake and by FY18 its stake in KTM stood at 48 percent through a Netherland-based subsidiary.
The Bajaj Auto-KTM combine does not want to stop. Both companies have charted out a growth plan for the next 10 years involving the Pune-based company becoming the biggest hub for premium bikes in the world. Apart from bikes made under Bajaj’s own brand and those under KTM, one new brand – Husqvarna– will also make its way through the Chakan facility serving the world markets.
“We are looking to build the second brand Husqvarna from Chakan and expect to roll them out before 2020. We have set an audacious target for ourselves that between Husqvarna and KTM we will strive to achieve a sale of 500,000 units in a not too distant future. This is an unbelievably historic figure to aim given that nobody has sold so many motorcycle at those price points,” added Bajaj.
Further, Bajaj said that the company will be formally signing a contract with Triumph over the next few weeks for designing and building bikes under the Triumph brand also possibly from Chakan. The contract will also have details of Bajaj establishing a foothold in those ASEAN and Latin American markets where Triumph is not present.
“(Triumph and Bajaj) have been in touch for over a year. We are still to sign any formal contract so I cannot share any details. But we are hopeful that in the next few weeks that we shall be able to conclude the contract. If that were to happen then it will be our goal to achieve a similar partnership with Triumph and similar results like KTM and hopefully with Husqvarna,” added Bajaj.
Last year, Bajaj and Triumph announced a non-equity partnership to develop mid-capacity motorcycles for not just India but global markets. This is after the British brand dropped plans to develop a 500cc motorcycle mainly targeted at the developing markets like India.“Perhaps in a 5-10 year time frame, it is not impossible that there will be more premium motorcycles bearing the brand KTM, Husqvarna and Triumph rolling out of India from one facility than there would be from across the world from other facilities combined. So that is where we are trying to go in terms of that segment,” Bajaj said.