How smart innovation helped Bajaj Auto cope with the slowdown

Murali Gopalan Chennai | Updated on January 21, 2020

Rajiv Bajaj, Bajaj Auto Managing Director

Managing Director Rajiv Bajaj says the Centre must do its bit by rolling back levies

Rajiv Bajaj believes smart innovation was at the core of his company’s strategy to cope with the prolonged slowdown in the domestic market. “There are two sides to the same coin in smart innovation: on the one side is offering a lot more for a little more and, on the other, is making aspiration more affordable,” the Bajaj Auto Managing Director told BusinessLine in a telephone interview.

Each of these initiatives was applied successfully to the company’s commuter and sports motorcycle segments in this difficult period, which began way back in September 2018, when insurance costs were hiked.

In commuter motorcycles, Bajaj Auto is positioned at No 2 and the management “knew perfectly well” that it was important to offer something superior to the top player in this space. According to its MD, this is where where the CT 110 and Platina H helped gain market share and prove that “we could bring in smart innovation” even to this segment.”For a small increase in price, we offered something superior,” he says.

Customer motivation

From his point of view, when things are down in the market, the customer needs motivation. “When we offered something more attractive and meaningful — a superior offering that is about smart innovation — people were ready to buy it,” explains Bajaj.

Likewise, in the sports segment where it rules the roost, the company went in for the same strategy albeit in a different way. The Pulsar Neon was a case in point in terms of styling and looking fresh. The price point was accessible even while the existing Pulsar was upgraded. The Neon helped bring more customers to the showrooms.

Bajaj believes that the other critical part of the strategy for the sports segment was the 125cc Pulsar. At a time when people were deterred by the hefty safety norms levy on bikes costing upwards of ₹80,000, the company decided to offer the Pulsar 125 with CBS (combined braking system).

The idea was make it an aspirational, yet affordable offering with more power. The underlying message was that the Pulsar brand remained the fulcrum despite the change in cc. “Eventually, the brand is the dog and cc is the tail. The dog must wag the tail and not the other way around,” says Bajaj.

The sports segment also saw the launch of the Avenger 160, which doubled sales of the brand to 6,000 units each month. Additionally, the launch of the Duke 125 and RC 125 saw monthly volumes of the KTM brand grow from 4,000 units to 6,000 units.

“Today, there are additional customers for KTM and parents who were intimidated by options like the 200 are now willing to let their kids buy the 125,” says Bajaj. Never mind that the 125 Duke is an equally powerful motorcycle, a fact that youngsters urge dealers to underplay with their parents so as to not scare them away!

Even with Husqvarna, the Swedish brand that will be launched shortly, the strategy will now see the launch of the 250cc range and not 400cc as “everyone thought we would”. Bajaj then makes known that something similar will happen with the Dominar 400 next month “as part of the exercise to make it accessible to interested buyers”.

High levies

The MD reiterates that the team at Bajaj Auto has thought through the downturn and taken suitable steps to mitigate its impact across all brands. He says it is now time for the Centre to play its part and help the industry bounce back.

More specifically, Bajaj says it must roll back the high insurance and ABS (anti-lock braking system) levies on bikes. This is because of realities like purchasing power and traffic conditions in cities. A lion’s share of people do not ride over 30 kmph and to impose an additional burden in the form of ABS is absurd.

“These two measures should be reviewed and the Centre should consider rolling them back,” adds Bajaj. While Bharat Stage VI emission norms will make products costlier, he says what could buffer the shock is to reduce the GST from 28 per cent to 18 per cent.

The buoyancy that will follow will be worth the effort, says Bajaj. “I am reasonably confident that the industry will be back to strong double-digit growth,” he adds. To that extent, 15 per cent growth in an 18 per cent GST era is a better option, especially when jobs also come back. “If the central issue is not corrected, nothing will go away,” cautions Bajaj.

Published on January 21, 2020

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