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| 'Our focus remains on bigger and sportier bikes' | | Q&A: S Sridhar, CEO (Two-Wheelers), Bajaj Auto |
| Swaraj Baggonkar / Mumbai Nov 10, 2009, 01:10 IST |
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 Sales of Bajaj Auto, India's second-largest motorcycle maker, surged 52 per cent in October to almost 250,000 units. The spike came after a long period of slowing sales. In fact, the company had recorded a fall of 33 per cent in sales in December last year, when it sold just 118,000 units. In an interview to Swaraj Baggonkar, the company's Chief Executive Officer (Two-Wheelers) S SRIDHAR explained the reasons behind the jump. Edited excerpts:
Did you do anything special to increase sales?
The reference point comes from the last quarter of the last financial year. We used to sell on an average 35,000 units of the Platina, 23,000 units of the mid-range bikes like XCD 125 and Discover 135, and 25,000 units of the Pulsar. Overall, the figure was 83,000 units in the last financial year, which meant a market share of 17 per cent.
If you compare it with the current quarter, the same Platina's sales is around 26,500 units and that of Discover is around 85,000-90,000 units, while we sell about 50,000 units of the Pulsar. This gives us a total of around 160,000 units — a 100 per cent growth in less than three quarters, with the market share being 27-28 per cent.
We have not changed our strategy at all. Our focus remains on bigger and sportier bikes, but this should be seen as a means of upgrading the current customer.
Can you elaborate on the success of the new Discover (100cc)?
The company has been able to increase sales from 23,000 units to the extent of 90,000 units in the September-October period. This has to do with the strategy of bigger and sportier but targeted at the commuter — the typical buyer who is used to buying a run-of-the-mill product. The Discover is bigger outside but frugal inside. Discover (135) is known as a bigger bike, for which we used to charge around Rs 48,000. This is what is known to the customer.
So, we have changed the inside with frugal technology, while the customer had the familiarity with the premium imagery. We introduced, for the first time in India, a five-speed gear box on a 100cc bike. It gives a mileage of 80 km, while we charge only Rs 800 more than the competition.
Is the demand for such bikes higher in the economy-conscious rural and semi-urban areas?
The response to Discover was much more in smaller towns than in the big cities. That is the area which is responding very well for Bajaj Auto. Every additional number we sell can be seen in the overall numbers since we did not have any presence at all in the (Hero Honda's) Splendor/Passion areas — as we either had an entry-level product like the Platina or the Pulsar. So, obviously, the additional numbers are coming from the competition. But it will be difficult to put a figure to that.
So where would you put the total volume of the entry-level (100cc) bike segment?
We also have the entry-level product called the Platina, but that is not the focus area for us. We haven't done anything for that bike. The entry-level segment will remain at 85,000 units per month for the industry. We sell somewhere around 25,000-27,000 units. Then Hero Honda is there, and so is TVS Motors. But the size is actually small.
Would you continue with the Platina even if its sales is not matching your competition?
Yes, we will as long as customers are asking for it. We admit it is not as hot an area as the other segments, which are the future.
But at the end of the day, you've got to admit that the bike is selling some 25,000 units.
You phased out the XCD 125. Does a similar fate await the Platina 125?
We used to sell 8,000-9,000 units of the Platina 125 and we have decided to slow down this product. After the Discovery was added to the portfolio, the Platina 125's sales volume was not adding much. So, while the bike is still being sold, the numbers are very small.
You have played the Pulsar and Discover brands very well in the market. Aren't you worried that some kind of fatigue may set in if new brands are not introduced?
This is an area where we have to be extremely careful. Creation of new brands is not what customers are looking for. They are, instead, looking for form and familiarity. Familiarity comes through the brand. We are concentrating on technology.
For instance, the earlier Discover used to give 55 km/litre, whereas the new model is giving 80 km/litre. This is our hard-earned lesson, that technology has to work. There will be an absolute resistance if there is any radical change in the form and brand.
Any projections for the sales and profitability by this year-end?
So far, it has been the best year in terms of profitability and, as far as sales goes, we will be exceeding whatever internal plans we had at the start of the year. The coming quarter is expected to be even better than the current quarter. This includes the demand which will set in for the new bike to be launched in the final quarter.
You don't have too many pro-biking outlets in the country, though you are aiming to sell as many premium bikes as possible. Why don't you extend the sales of such bikes to your usual sales outlets?
Three months ago, we decided to give all our products to non pro-biking outlets as well. But this exercise was limited to the cities where we already had pro-biking outlets. Now, we sell all our products in small towns, too.
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