Companies

Bajaj Auto hits the sweet spot with counter-intuitive strategy

Murali Gopalan Mumbai | Updated on December 04, 2018 Published on December 04, 2018

Rajiv Bajaj, Managing Director, Bajaj Auto.   -  File photo

The approach has worked wonders for exports, domestic business, says its MD

Three years ago, Bajaj Auto was facing headwinds on exports thanks to falling oil prices, the fluctuating rupee and geopolitical issues across the world.

Exports had been good for 15 years till then, before they began falling for two successive years between 2015 and 2017. “Our thinking was clear. The idea was to be counter-intuitive, which has been our strategy all along. When competition was not looking at exports in this uncertain phase, we decided to pursue it aggressively,” says Rajiv Bajaj, Managing Director.

This drive saw a slew of initiatives made in Nepal, Bangladesh, Iraq, Afghanistan, Colombia, the Philippines and a host of other countries. Today, the volumes are back with a vengeance in the company’s exports business.

“Thanks to our global drive in the last two-three years, we believe exports will touch 2 million units this year. It pays to be counter-intuitive. If you follow the herd, you are lost,” adds Bajaj. From his point of view, the company is “reaping the fruits” of its vision, which is to be a global player.

 

 

The second pillar of the counter-intuitive strategy involves products, which in Bajaj Auto’s case are its motorcycles and three-wheelers. Till about a couple of years ago, things looked difficult for the domestic three-wheeler industry. There were no permits being issued while the Qute, stuck in litigation, was a non-starter in the quadricycle segment (it is now ready to hit the roads).

Yet, during this dull phase, the company focussed on its petrol engines as well as CNG, LPG and new diesels. Today, the intra-city business (as its three- and four-wheelers are also known as) has grown over 30 per cent and is tipped to touch 8,00,000 units by the end of this fiscal. Exports will take up half of these at 4,00,000 units with motorcycles accounting for the balance 1.6 million units.

“This is the second pillar of our strategy, which was to focus on the domestic intra-city market. In the process, our volumes and profitability have improved dramatically,” says Bajaj.

Overcoming note-ban

As for motorcycles, following the demonetisation shocker of November 2016, the company could sense that the market was softening, which meant a counter-intuitive approach was the answer. “While everyone complained that things were soft, we decided to throttle up fully,” recalls Bajaj.

The core of this counter-intuitive strategy was product and the company decided to roll out 12 motorcycles across 24 months. “We are halfway there now in this plan which includes the CT 100 and Platina as well as the sports segment comprising Pulsar and Avenger,” he says.

The commuter segment, in particular, has taken off with a bang, thanks to price cuts which have seen sales of the CT 100 and Platina soar and enhanced Bajaj Auto’s share in this category from 25 per cent to 40 per cent.

Yet, there is more to the story. “While there is a lot of noise being generated on the CT 100 and Platina, people forget the big strides taken in the sports segment, too,” says Bajaj.

In just one year, the Pulsar 150 has raced away to clock 55,000 units a month. The newly launched Pulsar NS 160 is averaging 5,000 units a month, keeping pace with its NS 200 sibling.

“In the process, our leadership in the sports segment has gone up from 38-40 per cent to 42 per cent today,” says Bajaj. In the overall motorcycle segment, the company’s share has grown from 15 to 20 per cent in a year. “Now, going into the new fiscal, there will be new additions in sports (Pulsar, Avenger and Dominar) and I will be happy if we hold on to our market share in an arena where competition is fierce,” he adds.

The other three additions will be in the CT 100 and Platina, where the company will focus on low-cost innovation.

“I hope these interventions can help grow our share in motorcycles to 25 per cent by the end of next fiscal,” says Bajaj.

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Published on December 04, 2018
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