Companies

With Ducati, Bajaj Auto will reaffirm global goal in bikes

Murali Gopalan Mumbai | Updated on January 11, 2018 Published on July 24, 2017

Bajaj Auto Managing Director Rajiv Bajaj (file photo)   -  BusinessLine

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Bajaj Auto is all set to include Ducati in its brand kitty going by what Rajiv Bajaj hinted at the company’s annual general meeting in Pune last week.

Without naming Ducati, the Managing Director referred to a “very promising alliance” that was close to being finalised, perhaps in less than a fortnight. Given that the Volkswagen group has put Ducati up for sale and international media reports have already cited Bajaj Auto as one of the bidders, it looks as if the deal is almost as good as done.

In the process, it will only reaffirm what Rajiv Bajaj has constantly focused on in terms of his company aspiring to be in the league of the top global motorcycle players. It is here that buyouts like Ducati will help meet the objective. Bajaj already exports 40 per cent of its output to different parts of the world and the Ducati brand will help leverage its international presence even more forcefully.

What is already helping its cause is the partnership with KTM of Austria where Bajaj first picked up a 14 per cent stake in 2007 which has since grown to 48 per cent. KTM farmed out production of lower displacement bikes to its Indian ally whose Chakan plant near Pune is the base for the Duke 200, 250 and 390 range. These motorcycles are not only retailed in India but shipped out to Europe, the US, Australia and a host of other countries.

KTM has also identified the ASEAN region as a key growth engine and this is where the partnership with Bajaj is expected to grow to the next level. The more recent announcement pertains to production of Husqvarna bikes at the Chakan facility which, along with KTM, will boost overall numbers to 2.5 lakh units annually over the next four years.

KTM had acquired Husqvarna from BMW in 2013 and the decision to move part of its production to India is testimony to the cost and quality efficiencies at Bajaj Auto’s Chakan operations. It now remains to be seen if a similar business model will pan out with Ducati too once the acquisition is fomalised though these are early days yet.

If things do finally fall into place and Bajaj does snap up Ducati, it will only drive home the message of its intent to stick to the motorcycle space. Even as opinions are divided on its decision to steer clear of scooters (which are growing rapidly and account for a third of India’s two-wheeler output), it is clear that Bajaj would much rather grow its presence across all categories of motorcycles worldwide.

Yet, there is no denying the fact that the company’s domestic market share in two-wheelers has been facing competitive pressure from old rivals like Hero as well as a rejuvenated Honda and TVS. It is in this context that a scooter would possibly make more sense at least to ramp up volumes and keep the dealership fraternity content.

Bajaj, however, believes that the differentiator strategy it has adopted in bikes will hold it in good stead which explains the rationale of introducing bikes like the ‘V’ and Dominar 400 even while its Pulsar brand remains the biggest draw.

And even while old-timers get wistful about the Chetak scooter brand, the company plans to stay true to its motorcycle business, a journey which has seen allies like Kawasaki and KTM with Ducati now tipped to join the list.

Published on July 24, 2017
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