The Hindu Business Line : Bajaj fashions three-pronged strategy for export markets

TWO-wheeler major Bajaj Auto Ltd has worked out a three-pronged export strategy that should see its overseas sales grow by 35-40 per cent in the current financial year. The company expects to push the momentum it had last year in exports when it spurted by around 85 per cent to finish with exports of Rs 500 crore.

Mr R.L. Ravichandran, Vice-President (Business Development & Marketing), Bajaj Auto, discussing the company's plans with Business Line, said that it had three well-defined strategies for the overseas markets. "We look at external markets primarily with three strategies. One, a market where all we need to do is distribute through CKD or CBU routes. Two, markets where we need to create new products and thirdly, a market where we need to enter with existing products and probably with a good distributor or a production facility or a joint venture."

Earlier, most of the products that Bajaj exported were scooters and some motorcycles. However, in its target markets, like in India, the shift was towards motorcycles. With the expansion in Bajaj's own range to almost five-six platforms of motorcycles, it had a better offering to export, also the reason for its stronger showing. For the last fiscal, 60 per cent of its exports was two-wheelers and the rest three-wheelers. Of the two-wheeler exports, close to 90 per cent was motorcycles.

Bajaj has identified certain key markets which hold potential. Its first overseas office established at the Jebel Ali free trade zone has been the focal point for exports to middle Africa and the Saharan nations. Egypt and Iran also continue to be strong markets for Bajaj.

The other market which would be a focus area is South America, where the company feels it is fairly well represented in most countries, except in Brazil, the largest market. The company recently participated in a large auto exhibition in Brazil and found good consumer acceptance to products like Pulsar and Wind 125. "That kind of market will be our focus," added Mr Ravichandran. It even plans an assembly facility eventually in Brazil.

The other focus area is the Asean nations, which constitute the third biggest consumer of two-wheelers. The biggest among them is Indonesia, where Bajaj distributors are looking to introduce eco-friendly four-stroke autorickshaws. "That two-wheeler market requires great deal of effort from us. Everybody is there with Honda leading the show. There's Suzuki, Kawasaki and some Korean and Chinese models. Our idea is to look at the right product mix for two-wheelers; we are selling couple of thousand motorcycles there also," said Mr Ravichandran. Bajaj's Pulsar model has taken off well there, he added. It also wants to develop a new step-through model for the Indonesian market, but for now it will create a base there with its motorcycle models.

The company also wants to sustain its thrust in the African markets where current products are suitable. Market research and consumer trials will be completed in about four to six weeks. Nigeria, dominated by Chinese bikes, is the biggest market it wants to crack. "It is a highly price-conscious market because motorcycles are used as taxis. If you ask a college student to buy my bike, he won't, for it is socially not acceptable to buy an expensive bike. If they can afford it they would buy a car," explained Mr Ravichandran. Given that context, Bajaj is trying out various product concepts to see if a consumer would buy better quality at a slightly higher price. "If we are able to get a correct understanding we are planning to enter the market," he added.

Bajaj has also made a beginning by selling bikes in the Philippines branded in the name of its technical partner, Kawasaki. The two signed an MoU in February. Kawasaki, a large multi-product conglomerate, only makes high-end bikes and does not have sub-200cc models. Kawasaki is marketing the new model, Wind 125, developed by both companies, in the Philippines. The Bajaj-developed models, Caliber and Byk, which is a fuel-efficient bike, are also being distributed by Kawasaki. "This is a good beginning strategically for Kawasaki to evince interest in Bajaj products for markets which can still buy less than 150 cc," said Mr Ravichandran.

Product prices hiked

Bajaj Auto, which has a 29 per cent share of the two-wheeler market, passed on the increasing prices in steel to consumers when it hiked prices on April 1. Prices of two-wheelers were increased by Rs 500 on an average and Rs 1,000 on three-wheelers. While other players like TVS and Yamaha too have hiked prices, Hero Honda is the only manufacturer not to have hiked prices so far.

More Stories on : Strategy | Exports & Imports | Two/Three Wheelers

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