Monday, January 29, 2007

Bajaj gears up for 4-wheel drive

Bajaj Auto (BAL) is planning a full-fledged foray into four-wheelers with a range of light passenger and goods carriers. The company has decided to set up a new plant for its four-wheelers and the location will either be Maharashtra or Uttaranchal.
The first ‘lite’ four-wheeler will roll out in 2009. While BAL has so far only spoken about launching one light vehicle, the company has now decided to roll out an entire ‘family’ of products to plug the ‘middle ground’ between two-wheelers and four-wheelers.
The proposed foray into this new segment forms part of BAL’s search for faster-than-industry-average growth. Speaking to Indiatimes Auto, Bajaj Auto’s managing director Rajiv Bajaj said, “The middle ground (between two and four wheelers) can spawn a range of ‘lite’ vehicles - a diet version if you will - and that’s something we will look at.
We are intending to get into a family of ‘lite’ four wheelers both for people and goods. We will get into that business first with a goods carrier.”
The ‘lite’ range, he said, will roll out of a new platform that Bajaj is currently developing. And the company will not look for any technology partner for this project. “It will be born out of our own skill and technical expertise so we can control the costs and there are no surprises,” Mr Bajaj said.
The whole idea for the ‘lite’ range came from a single question - “Can one conceive of a whole family of vehicles based on this middle ground?” said Mr Bajaj.
“Is it possible to keep things simple like two wheelers but offer the comfort and convenience of a four-wheeler in a way that’s affordable for the customer and profitable for the company? If we can, then we have a new business model.”
The alternative business model is also part of Bajaj Auto’s search for faster-than-industry-average growth. “Worldwide, the two wheeler market is fairly saturated and the four-wheeler market is also getting cut-throat,” said Mr Bajaj.
“So unless we think out of the box, we will be stuck with around 10% growth. Finding the middle ground between two and four-wheelers is one such strategy to break beyond 10% growth curve,” he explained.
Bajaj is not the only two-wheeler major to foray into four-wheelers. Arch rivals Munjals of Hero group have also announced their intentions to get into four-wheelers though it isn’t clear whether the foray will be into passenger or goods carriers.
In an earlier interview with Indiatimes Auto, Hero Honda MD Pawan Kant Munjal maintained that he never said Hero group will get into cars, only four-wheelers. Meanwhile Hero’s Japanese partner Honda has already voiced its discomfort with the idea of Hero getting into the car business.
Bajaj Auto is also cranking up its retail strategy for higher-end bikes with the company-owned Probiking showrooms. “Right now the line up includes the Pulsar and Avenger but hopefully in future there will be bigger bikes,” Mr Bajaj said.
“Out of our total network coverage of 52 towns, BAL is directly selling in 6 through the Probiking showrooms. In the next 12-24 months, we want to be present in all 52 towns.”
These showrooms will cater to the “trend setter customer. By next year, we should be selling 5% of the three million bikes we sell annually ourselves through this channel,” he added.
As for changing equations with Japanese partner Kawasaki as Bajaj Auto moves away from the 100cc/four-stroke market, Mr Bajaj admitted there was a “lull” in the relationship but added that a “partnership isn’t so cut and dried. We carry a huge obligation towards them and we are discharging our dues”.
Even though Kawasaki’s contribution to the CT100 is almost zero, BAL still pays a royalty. “We are investing in future technology,” Mr Bajaj said. “As India matures and bigger bikes take off, I can go nowhere else but to Kawasaki.”
As for how the equation will change if Bajaj partners with another global player (industry reports say the company is in talks with Yamaha for a joint venture), Mr Bajaj said, “Hypothetically even if Bajaj partners with someone else that could easily be a separate company. Bajaj R&D, that works with Kawasaki, will have very little role there.
We would always like to continue the relationship between BAL and Kawasaki.”

Source:- Indiatimes Auto