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Bajaj Auto is ready to play aggressively in the entry motorcycle segment thanks to price cuts that she hopes to buy her market share amid competition from Hero Motocorp's cutting throat.
The Pune-based company said it was sacrificing profitability to generate volumes, "especially in the 100cc segment – a strategy that can be played out for the next three years.
Bajaj Auto reduced model prices CT100 from Rs 2,000 in March to Rs 30,714 Motorcycle gear in the country The strategy seems to be paying off as CT100 volumes jumped 76% in the June quarter to reach 1.9 lakh. The company also moved from 25% to 34% in this M1-rated segment, targeting 50% of the M1 segment, currently dominated by Hero Motocorp's HF Dawn.
Bajaj Auto expects the success of the M1 segment to strengthen the visibility of its models in the M3 segment and thus increase overall sales. [19659002] "Ideally, we would have liked to focus on the M3 and high-end segment that we had tried in the last 2-3 years with the V and the Discover. But for various reasons that did not work. Now, for a company of our size with global operations, a 13-14% market share is unacceptable. And, therefore, it is more of a situation than we have done by force rather than by choice, "said Bajaj Auto, Kevin D 'Sa, President (Finance)
Segment strategy
Generally, the M1 segment includes motorcycles of 100 cm3 at a price of 40,000 rupees and more. Although the segment generates 50% of Bajaj's total domestic volumes, it only accounts for 14% of the company's business turnover.
HF Dawn de Hero is a competitor in this segment and according to Bajaj his volumes have remained stagnant. Buyers of these entry-level motorcycles come for the most part from the backcountry or are second-hand vehicle buyers.
Bajaj Auto recorded volume growth as its results were lower than forecast for the quarter ended June 30, 2018. the margin fell to 17.3%, lower than the 20% average achieved by the Group. business for several quarters.
In the next target slab, the M3 segment includes motorcycles whose price varies between 50,000 and 70,000 rupees and 125 to 150 cm3. The M2 segment consists of slightly premium motorcycles that cost 45,000 Rs 50,000 with 100cc engines at 125cc.
Senior executives say that premium motorcycle sales under the Pulsar and KTM brands, exports and revenues from all three wheels offset the losses. According to D & # 39; s, "the M1 segment has seen the fastest growth in recent months due to rural income growth, while the M2 segment that produced the Splendor Hero n 39 experienced only one-digit growth.Only the M1 segment and the sports segment are growing (higher than the other segments). "
" Hopefully in the next 2-3 years we would have built the portfolio in the entry segment, "adds D & # 39; Sa. he hopes, will increase the share in the M3 segment and once the strategy works, "we will start withdrawing from the M1 segment a bit but it's in two years."
Bajaj's attempt is to oust buyers of the M2 category bikes by offering M1 bikes at lower prices launches into the M3 segment. The company will launch a new product on the M3 segment during the last quarter of the current fiscal year.
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