Bajaj Auto hits the bull’s-eye with CT 100

Till about six months ago, Bajaj Auto’s market share in the entry-level bike segment was 24 per cent. It had a solo product in the Platina which was up against Hero Motocorp’s HF range.

Today, the company’s share in this space has zoomed to 40 per cent and t is rapidly closing in on the market leader. The turnaround has come thanks to a brand which was first launched in 2004, then took a break four years later to spread its presence in Africa, is now back in India. The CT 100 alone accounts for sales of 50,000 units each month.

Rajiv Bajaj, Managing Director of Bajaj Auto, is however not surprised by the response to the bike. “This is a marketing industry where the positioning becomes more important than the product,” he says. As he puts it, experts constantly dwell on the tangible while it is the intangible (or positioning of the product) which is the key.

Yet, in the case of the CT 100, its success story is even more intriguing considering that it exited the Indian market and returned a good eight years later. According to Bajaj, this is ample proof that brands do not die which is true for the Maruti 800, Splendor, Activa and his own company’s own Chetak scooter whose production stopped years ago.

In addition, there is a distinct first mover advantage which, however, operates in the context of the segment. Years ago, when people wanted an affordable option in the 100cc space, along came the CT 100. “Once you are a strong brand, you are in control unless you mess things up. Customers rarely leave you otherwise,” says Bajaj.

Still it begs the question: why did the company discontinue the CT 100 in 2008? This was the time it had set its sights on becoming a specialist global bike maker. “From our point of view, it was as important to stay at the profitable end of the bike segment,” says Bajaj. The CT 100 did not fit in with this new list of priorities and marched off to Africa to write a new script as the Boxer.

Why did Bajaj Auto then decide to bring it back now? Rivals say this move was triggered by the fact that it was losing market share rapidly in motorcycles. The decision to solely focus on the Discover (along with the Pulsar) also misfired, they add.

From its MD’s point of view the Boxer brand has had great success in Africa. Today, it is a cost-effective platform which does high volumes. And while critics may say it looks like the Boxer, he says a lot of engineering has gone inside the bike. “The CT 100 is the perfect example of the benefits of globalisation,” says Bajaj.

He also refutes criticism that the CT 100 is not going to generate the kind of margins in the space it operates in. Of the 3.5 lakh bikes the company rolls out every month, the CT 100 accounts for 20 per cent (both domestic market and exports). This clearly shows that it is “is by no means a loss-making proposition” when overall bike margins are over 20 per cent each quarter.

The bike’s success in a span of just three months is also ample proof that when the strategy is right, the results come overnight. Bajaj maintains that when it comes to the auto sector, advertising is the result, and not the cause, of success. “By doing so, you speak to your own customers and give then the confidence that they are with a good and reliable product,” he says.

The entry segment, which has Hero’s HF range, CT 100 and Platina as the lead brands, accounts for 25 per cent of total bike numbers. The premium category, whose brands include Pulsar, Unicorn and Apache, has a share of 15 per cent. The largest chunk of 60 per cent is the value/executive space taken up by brands like the Splendor and Passion.

From Bajaj Auto’s point of view, the CT 100 and Platina are averaging nearly 85,000 units each month in the domestic market while Pulsar, Avenger and KTM take up 65,000 units at the premium end. This aggregate of 1.5 lakh bikes is ahead of Hero’s tally of 1.1 lakh units where the HF series accounts for a lion’s share.

“We are the leaders for 40 per cent of the industry which means the job has been done for two segments,” says Bajaj. The company had focused on the entry space from January-March while April-June was devoted to the premium/sports space.

“From July-September, we will focus on the mid-segment with the Discover. We will launch a new brand, keeping in line with the twin brand strategy for each segment,” he adds. The new ally for the Discover will be critical to the turnaround in a segment where Hero rules the roost.

Can the company pull it off when competitive pressure is at its most intense level? “Nobody can really predict the future but from our point of view, there is really no reason why the success with our brand strategy so far should not be replicated in the mid-size segment either,” reasons Bajaj.

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