Bajaj Auto takes on Hero Honda

16 June 2004

Bajaj Auto is trying to challenge Hero Honda's dominance in executive segment of motorcycles through launch of new bikes in the segment. The executive segment remains the largest category accounting for over 60% of total motorcycles and it is dominated by Hero Honda (HHML).

Bajaj has only very low market share in the executive segment where it has only 10% share. It is now planning to augment it presense in segment through the launch of 'K60'. The new model will come with the DTSi technology which the company introduced in Pulsar twins.

This would be Bajaj's third attempt at the executive segment after the lukewarm response to Caliber 115 and Wind 125 in FY04. Even though BAL has proved its superior product development capabilities in the past, many analysts feel that making an inroad into Hero Honda's stronghold will be a tough task. Also Hero Honda is expected to strengthen its product portfolio in the executive segment through proposed new launches in the second half of 05. Market share for FY04 remained unchanged at the previous year's level of 24%, as gains in the premium segment were offset by a decline in the economy segment.

Bajaj Auto will also be launching a new model, CT100, in the economy segment positioned against HHML's CD Dawn. The success of these launches would be critical for BAL to get near the 100,000 per month mark in motorcycles.

It is expected that there will be a 16% volume growth in motorcycles and 14.2% growth in total two-wheeler volumes for BAL in FY05. Bajaj Auto is also focussing on exports. Bajaj Auto is the only two-wheeler company which has a significant contribution from exports.

Motorcycle exports registered a growth of 81% during FY04 and the share in total volumes increased to 7.8% in FY04 from 5% a year ago. BAL has targeted 35-40% growth in exports for FY05 with ASEAN region and South America being the key export markets. It also intends to follow a mixed strategy of selling CKDs and setting up assembly units in select markets.