Thursday, February 01, 2007

Bajaj to exit 100 cc ,Jan vehicle sales up 13 pct

Bajaj Auto Ltd., India's second-biggest motorcycle maker, said on Thursday it would exit low-margin 100cc motorbikes and launch a new motorbike platform that would help boost profitability.

"With increasingly strong sales of Discover (125cc) and Pulsar DTS-i (150-180cc) platform products, only 45 percent of Bajaj motorcycle sales come from the relatively lower margin 100cc segment," Managing Director Rajiv Bajaj said.

Product design and specifications for the new platform that will be launched in the second quarter of the fiscal year to March 2008 have been finalised and trials have been scheduled for the April-June quarter, he said in a statement.

Bajaj will also commence production at a new plant in Uttarakhand in April, and plans to ramp up its output to 1 million units during the course of the fiscal year.

The new launches, along with robust sales of motorised three-wheelers and more exports should "stabilise, if not enhance profitability" in the fiscal year to March 2008, Bajaj said.

Shares in Bajaj were unchanged at 2,763 rupees in a firm Mumbai market.

The Bajaj Platina 100cc bike competes with the Hero Honda CD series and TVS Motor's Star City.

Hero Honda has said it is expanding its offering in the entry-level, which contributes about 40 percent of its revenue.

Hero Honda and TVS Motor reported worse-than-expected quarterly earnings on high raw-material costs and fierce competition that prevents bike makers from increasing prices and forces heavy advertising and promotion expenses.

Bajaj said sales of motorcycles rose 12 percent in January from a year earlier to 195,560 units. Vehicle sales, including three-wheelers, gained 13 percent on the year to 229,583 units.

Bajaj, overtaken by Hero Honda in 2002, has vowed to reclaim leadership in the world's second-biggest motorbike market.

It expects to sell about 2.85 million vehicles in the fiscal year to March 2007 and is investing 15 billion rupees over three years to take its overall capacity to 5.1 million units by 2009.