Bajaj Auto Ltd has made a proposal to its technical partner Kawasaki Motor Company for a collaboration to manufacture Kawasaki's sub-200cc motorcycles in India and market them worldwide.
There is, however, no proposal yet to offer the Japanese partner any equity stake in the company.
Bajaj Auto chairman Rahul Bajaj said a formal proposal has been sent to Kawasaki for expanding the technical collaboration for a whole range of new bikes. "We have asked them to consider whether Bajaj Auto can make these bikes in India and marketed not only in India, but to several other countries too, where there no legal problems," he said.
The company has made the proposal with the reasoning that sub-200cc bikes have a huge market in the country. They can also be manufactured at lower costs due to low labour and other input costs. Bajaj has also established itself as a quality manufacturer of bikes indigenously using Kawasaki technology and the same can be applied to new bikes which have a market in several other countries. Manufacturing costs in Japan, as well as Europe, are extremely high.
Bajaj said it is not feasible to manufacture Kawasaki's bikes which are powered by 250 cc and more engines, since the market for these products is near minimal in India at present. Since local consumption will be low, economies of scale will be hard to achieve.
He said the company would not be entering into any alliance involving Suzuki and Kawasaki. "I understand that Suzuki has pulled out of its joint venture with TVS only because it wants to come to India on its own. Otherwise, it would not have sold its shares at such a low price (Rs 15 per share against the trading price of Rs 90)," Bajaj said.
Recently, Suzuki and Kawasaki had reached an agreement to jointly develop motorcycles. Suzuki will have control in markets where it has a larger marketshare than Kawasaki, and vice versa.
Bajaj said several Chinese firms, including China Qingqi Group Company, have approached the company for joint manufacturing or marketing of Chinese bikes in India, and Bajaj scooters and three-wheelers in China. "We are still open to the idea of making or marketing Chinese bikes in India under our brand. However, we are still not clear about the quality of these products. In any case, Chinese bikes are not going to swamp the market. Here and there, some company might sell a few thousand. But I do not see anything happening in the next two years," he added.
