Time for Rajiv Bajaj to re-think scooter strategy

With bike sales in January falling for the fourth straight month in a row and scooters turning out to be the fastest growing segment in the whole industry, it is clearly the time for Rajiv Bajaj to re-consider the decision taken six years back to exit the scooter market. To his credit, it is impossible to be wiser with hindsight, but the big question hanging for Bajaj Auto is if the market strategy should change now? 

The numbers are out there for all to see. The scooter market has jumped 27% to 3.74 million units in April-January, 2014-15, while bike sales have risen just 4% to 9.11 million in the period. This trend is not limited to this year alone (see table). As if on cue, ever since Bajaj exited the segment in 2009-10 and a new wave of light automatic scooters started, the share of scooters have gone up from 16% to 28% of India's 16 million two-wheeler market. 

Much of this growth is credited to Honda, and its top-selling Activa model that does about 2,00,000 units every month, but of late most major players such as TVS, Hero MotoCorp and Yamaha are witnessing strong demand. In the words of an industry executive, the market is ready to lap up as many scooters as one can produce. 

With no scooters to sell, in the 10 month period till January this fiscal, Bajaj has seen a 14% drop in overall two-wheeler volumes to 1.5 million units. In this period, Hero, Honda and TVS have all seen a 6% (5.4 million), 23% (3.5 million) and 23% (1.8 million) rise, respectively. 

In fact, market sources say that the strong rise scooter demand from urban areas has even led players like Hero to advance scooter launches, and delay the rollout of a few of its new bikes. In fact, Hero, which only has two scooters in the market today, the Pleasure and Maestro, is expected to launch four more scooters this fiscal itself. Two of these are the Dash and Dare models that have already been showcased, while the third will sport Hero’s first self-developed engine, and the fourth will be the niche ‘Leap’ hybrid model. Even TVS’ Jupiter has done well, with monthly volumes of over 30,000 units. 

For the last years, there have been rumours aplenty of how Bajaj already has a few new scooter prototype models doing the rounds at its Research and Development center in Pune. Clearly, if these talks are not fiction, and all that is awaited is a green signal from the management, the maker of the legendary Bajaj Chetak may not be a late (re)entrant into the market just yet.