Bajaj Auto to set up first overseas manufacturing plant in Brazil

Pune-based Bajaj Auto will set up its first overseas manufacturing factory in Brazil through its wholly-owned arm, Bajaj Do Brasil, according to a report by The Economic Times (ET).

Executive Director Rakesh Sharma was quoted as saying by ET that a local presence in Brazil will assist Bajaj Auto gain insights into product development and customer behaviour. Brazil is Latin America's biggest two-wheeler market.

Sharma stated that the initial capacity of the Brazil unit will be 20,000 units per month. The proposed plant is likely to come up in Manaus Special Economic Zone in northern Brazil and begin production in the next 12 months, he added.

The Brazil plant will also make the motorcycles of  KTM AG, an Austrian company in which Bajaj Auto has a 48 per cent stake, along with the Bajaj models.

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For co-developing middle-weight motorcycles, Bajaj Auto also has a global partnership with motorcycle manufacturer Triumph. The UK-based company already set foot in Brazil's manufacturing sector.

Sharma told ET that due to Brazil's size, complexity and sometimes unpredictability, Brazil is an exception. and needs a longer-term staying power. The company thought it was best to have a different business model and undertake the business development directly. Bajaj Auto has yet to firm up the investment plan for the planned Brazil unit, he added.

Bajaj Auto is India's largest exporter of motorcycles and three-wheelers and has a presence in more than 90 countries.

The distributor model has allowed Bajaj Auto to achieve a leadership position as it allows the company.to combine its expertise in product and brand development with the local partner's entrepreneurial energy and knowledge, Sharma stated.

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According to market research firm IMARC Group, Latin America's two-wheeler market touched 10.6 million units in 2022. The market will reach 23.7 million units by 2028, showing a growth rate (CAGR) of 14.2 per cent during 2023-2028, IMARC Group projected.