Kawasaki shifts gear for solo bike ride in India

Beginning tomorrow, April 1, Kawasaki of Japan will start retailing its motorcycles on its own in India. What was a joint arrangement with ally Bajaj Auto for many years will now see a parting of ways even while the two will continue to collaborate overseas.

To that extent, there is no divorce of sorts except it is clear that Kawasaki is keen on building its brand more aggressively. This clearly stems from the fact that the former Probiking model with Bajaj has now given way to a greater emphasis on KTM, the Austrian bike-maker, in which the Indian company has a near 48 per cent stake.

Kawasaki has barely a dozen outlets and to take the India story forward on its own will be quite a challenge. There will also be no direct conflict with Bajaj considering that the Japanese bike-maker will focus on 250 cc plus models with price tags of over ₹5 lakh. How it holds its own in an intensely competitive market like India with a host of options for the customer remains to be seen.

Yet, this alliance with Bajaj is interesting for a lot of reasons. One, there was no equity involved right from the beginning unlike other Indo-Japanese bike joint ventures of the 1980s, which included TVS Suzuki, Escorts Yamaha and Hero Honda. All the three eventually broke up at different phases with the most recent being the high profile divorce of Hero and Honda.

In the case of Bajaj and Kawasaki, the relationship has steered clear of the equity route even though there were talks over 15 years ago of the motorcycle division being spun off as a separate joint venture. The thinking then was that Kawasaki could end up holding a 10 per cent stake in this new outfit though nothing materialised eventually.

The more significant aspect of this partnership is that it marked the first step for Bajaj to get into the motorcycle space even while its geared scooters were ruling the roost in the 1980s. The company was the monarch of all it surveyed till the motorcycle revolution truly started gathering momentum with Hero Honda leading the way and dethroning Bajaj from its Numero Uno slot in two-wheelers.

Kawasaki was, therefore, relevant in the context of charting out the new course for motorcycles. It was also the best option for Bajaj considering that geared scooters had just fallen out of favour and Indian customers were furiously queuing up for bikes. Kawasaki was a key pivot even though the products that rolled out like the Caliber did not quite set the market on fire. Yet, the brand association was constantly highlighted in the bikes to signal the new way forward.

Bajaj also attempted to hone the India base for its Japanese ally through local development of models like the Wind but once again the big break was not happening and Hero Honda was literally running away with market share. The big breakthrough happened when Bajaj used its in-house talent to manufacture the Pulsar in 2001, which took off like a rocket. It was the game changer in the sports segment and the brand is still going strong.

Even as the Kawasaki alliance continued without a hitch, Bajaj was now putting in place a strategy to make a strong pitch in bikes clearly buoyed by the success of the Pulsar. The strategy of differentiation along with the first mover advantage had worked like a charm in the sports segment and there was no reason why it could not be replicated in the more voluminous commuter space where Hero Honda was, and continues to be, the leader.

In 2004, with Discover 125, Bajaj deliberately positioned the differentiator in a segment dominated by 100cc bikes. Bajaj, by this time, had also decided to shift its focus completely to motorcycles as part of its effort to stay a specialist in a particular space. In the process, the former scooter king opted to gradually bow out of this segment keeping in line with market preferences. Kawasaki was particularly relevant during this transition phase since it pitched in with retail efforts for its Indian ally in markets where it was particularly strong, especially in the ASEAN region. This was important to Bajaj as part of its business model to factor in exports aggressively and look at the bigger world beyond India to build its motorcycle presence.

The desire to go global also propelled the move to acquire a stake in Austria’s KTM, which has steadily grown over the years from a little over 14 per cent to 48 per cent today. Bajaj, however, has constantly reiterated that building a stake is not the priority with KTM as the two have bigger plans to build their partnership both here and overseas.

Over the years, KTM bikes are being built at the Bajaj plant at Chakan near Pune and exported across the world. This has worked perfectly thanks to tremendous cost efficiency coupled with quality, which would have been difficult to replicate in a costlier base like Europe. KTM bikes have also been gaining ground in India and the Bajaj partnership is now eyeing other geographies such as Latin America and ASEAN.

It was only inevitable in this changing landscape that Kawasaki would have been keen to build its presence on its own and the process started with establishing its own arm some years ago. Its bikes are assembled at the Bajaj scooter plant in Akurdi and the latest change in the script is the decision to go it alone for retail. It will be interesting to see how Kawasaki builds its presence in India for its bikes in the coming years even while balancing the relationship with Bajaj in overseas markets.

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