Bajaj Auto Ltd.

: Overtaken in the Indian Scooter Market

Presented Byto edit Master subtitle style Click Yogesh Kumar Varyani Puneet Mathur Vikas Mishra Shaili Shiorhi Vishal Bhardwaj

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3 Jan 2006 Bajaj auto limited slams brakes on chetak Like Volkswagen Beetle, the product (Bajaj Chetak) had lost its relevance."1 - Rajiv Bajaj, MD, Bajaj Auto Ltd., in January 2006

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INTRODUCTION
In

the

mid

-1940s,BAL

started

as

an

important of two and three-wheelers .in the early 1960s,BAL ,in collaboration with

piaggo ,started manufacturing vespa brand scooters at its plant near Pune ,

Maharashtra.
In

1970s,BAL

started

manufacturing

scooters under the Bajaj brand. 4/14/12

 In the late 1990s the Indian two wheeler

market witnessed a shift in consumer preferences.

As

economy the

was

growing

which of

increased

disposable

incomes

middle class.
By

the early 2000s, motorcycles sales

surpassed that of scooters.

BAL also lost its title of Indias largest two4/14/12

wheeler company to Hero Honda. As Hero

Bajaj Auto Ltd.(BAL)

Bajaj is India's second largest motorcycle

maker, smaller than Honda Motorcycle Scooter India, but larger than TVS Motor Co. Ltd.
Bajaj Auto, is ranked as the worlds fourth

largest

two-

and

three-

wheeler

manufacturer.
The company is well known for their R&D,
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CSR
Bajaj Auto is committed to nation-building

and

contributing of

to the

the weaker

uplift sections

and of

development

society. This is a legacy of the founders, Jamanalalji, Kamalnayanji and Ramkrishna Bajaj.
Jankidevi Bajaj Gram Vikas Sanstha (JBGVS) Samaj Seva Kendra.
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OVERVIEW
Founded in 1926 by JamnaLal Bajaj. His son, Kamalnayan Bajaj, then 27, took

over the reins of business in 1942. from the GOI.

In 1959, the company secured the license The present Chairman of the group, Rahul

Bajaj, took charge of the business in 1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has gone up from Rs.72 million to Rs.100.76 billion (USD 2.3 billion).
The company was incorporated on April 30,
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BACKGROUND
1926- Bajaj Auto was found by JamnaLal Bajaj. 1956- Company secured a license from the GOI. 1960- Company went public & collaboration with

Piaggio.
1961- Started the production of scooters. 1962- Started the production of three wheelers. 1971-

The agreement with piaggio ended and Started selling scooters under the Bajaj brand

1972- BAL Introduced the Bajaj Chetak scooters. 1975- BAL entered into a joint venture with WMDC and

joint venture was called MSL. The joint4/14/12 was the venture Cont result of technology transfer policy of GOI.

 1986:- BAL entered into a technical partnership with

Kawasaki Heavy Industries & launched the Kawasaki Bajaj.

1990:- The Bajaj Sunny was introduced. 1997:- BAL launched the Bajaj Boxer. 1998:- BAL introduce the Bajaj Caliber. 1999:- The company launched the Bravo, a geared

scooter. scooter.

2000:- Bal launched the Saffire, a gearless 2001:- It introduced the Pulsar. 2004:- Bal created a new Logo.
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Bajaj Group of Companies

Mukand

ltd. : Manufacturer of Stainless alloy, real estate, international trading, handling equipments (cranes). goods

Bajaj Electricals : Manufacturer of electric Bajaj Hindustan ltd.: Manufacturer of white

crystal sugar and industrial alcohol. auto finance : including hire purchase. Financial

Bajaj Hind

services

Lamps ltd. : Manufacturer of fluorescent, miniature lamp and glass shell, lead glass, etc.
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Bajaj international pvt. Ltd.: Exporters of

 Mukand international ltd.

ferro alloys, steels.

:Trading in metals,

Mukand Engineers ltd. :Construction, fabrication and erection of industrial and infrastructural projects and infoTech business. services in loan and investments, consumer finance, etc.

Mukand Global Finance ltd. :Provides financial

Bajaj Consumer Care ltd. Jamnalal

:Manufacturer and Trader of ayurvedic medicines etc. Sons Pvt. finance company. Ltd. :Investment and

Bachhraj & Co. pvt ltd.

:Investment company.
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The Hindustan Housing company ltd. : Service

The Indian Two-Wheeler Market

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The Indian Two-Wheeler Market

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API(Automobile Products of India)

In 1950, API was the 1st Scooter

Manufacturer of India.

It manufactured Lambretta, with the

help of an Italy based company Innocenti Ltd.

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Other motorcycle manufacturers at this

time were :
i. ii.

Enfield India Pvt. Ltd. Ideal Jawa Ltd.

iii. Escort Ltd.

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Jawa sold Yezdi brand of Motorcycles.

Escorts sold Rajdoot brand of Motorcycles

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Two- Wheeler Market

Between 1950-1980 , Indian Two-

Wheeler market was dominated by License Bajaj.

Limitation of production capacity of

scooters by the Government of India.

Indian domestic market protected from

foreign competition, due to restrictions 4/14/12 placed by GOI.

Emergence of Bajaj As a BRAND

Bajaj emerged as a brand, with the

manufacture of Vespa Scooter in 1961, in collaboration with Piaggio Industries.

Bajaj overtook the sales of API in no

time, after its Vespa launch

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Bajaj Auto Ltd. had most successful scooter models( Chetak & Super )

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Benefits of Using Scooter at that times

Scooters were 30% cheaper than the

bikes at that time.

Scooter was easy to maintain. Can be used by everybody, as Scooters

were lighter than the motorcycles that time.

Inefficient public transport. Scooters were fuel efficient.

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Humara Bajaj Ad Campaign

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Market Share of Scooters in 2008

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CSR Activity Undertaken by Bajaj

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Awards By BAL

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The Turning Point

In 91- 92 overall sales of two wheelers

declined by 15% & 8% respectively because of a recession in the Indian two wheeler market.
The scooter segment was the largest sub-

segment in the two wheeler market with 42% share (in terms of unit sales) followed by motorcycles (37%) & mopeds (21%)
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Motorcycles until then were perceived to

be bulky, accident prone and non utilitarian.

The late 90s saw people preferring to

motorcycles in the rural areas for reasons like :

Fuel economy was added advantage on

tough rural roads

4/14/12 Good market value on resale was another

 Demographic changes Increasing proportion of

younger people in the overall population made a big difference to the market
Motorcycles with improved styling attracted

young people as compared to staid products sold by BAL and other scooter manufacturers.

Meanwhile, Hero Hondas Splendor, proved to

be a blockbuster product, as sales for motorcycles surpassed that of scooters for the first time in 1999.
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Hero Hondas commercial campaign Fill it,

shut it, forget it.. highlighted fuel efficiency and low maintenance costs of the model.
BAL

admitted that it didnt foresaw the consumer preference changing from scooters to motorcycles.

And, therefore were unable to hold on to the

topmost position and relinquish it to Hero Honda that had only motorcycles in its product portfolio.
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The

decline for the scooters had already started when the sales for the scooters fell by around 75,000 units in 1999-2000.

The shift took its heavy toll on BAL, with

volumes falling 40% y-o-y basis as scooters were 80% of the total business.

Many analysts had already predicted the end

of Bajaj Auto.

In 2000 ,Bharat Stage II, a new set of emission

norms, came into effect. It was for petrol two-

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BAL FIGHTS BACK

Poor research. BAL increased its production of motorcycles by 67.6% in 2001 even as the production of scooters fell by44% By 2001, the company was manufacturing as many motorcycles as geared scooters. Failed to anticipate consumer response.

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Change Portfolio

New launch gave wider range Refresh image.

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Rebranding of Hamara Bajaj

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The Flying

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Brand Positioning Statement

DEFiNiTELY MALE

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Trying to resurrect Scooter sales

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 Price

differential between motorcycles had narrowed.

Trying to Resurrect Scooter Sales

scooter

and

In 2001, BAL lowered the prices of Chetak

and Super by Rs. 5000 to Rs. 8000 and removed some accessories like spare wheel, luggage box, etc., from the base models.
In the late 1990s while geared scooter

sales were falling, the gearless scooter segments had been growing 4/14/12 at 25% per

 To add to BALs problems, HMSIs sold about 10,100

unites of the Activa within just three months of its launch in 2001. in 2002, which also become quite popular.

Kinetic launched the Nova, another gearless scooter

In April 2003, TVS launched the Scooty Pep (with a

75cc, four-stroke engine), an upgrade version of its Scooty, with better styling, technology, and storage capacity. system called wondergear in which no gear shifting require. the Chetaks image.

In 2004 Chetak was introduced with a new gear

New ad campaigns were also launched to brush up

BAL

4/14/12 was forced to phase out several models including the Spirit, the Sunny Spice, the Legend

Images of Bajaj Bikes:

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Fall of icon

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 It is a history I would

like to forget. My company has lived too long on nostalgiaholding on to anything from the past is a sign of weakness."

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Porters Five force Model

POTENTIAL
Bargaining power of suppliers

ENTRANTS
Threat of entry

INDUSTRY SUPPLIER S COMPETITOR S Rivalry among Existing Firms SUBSTITUTE S 4/14/12 BUYER S
Bargaining power of buyers

Threat of Substitute Products or Services

Marketing Myopia

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Outlook
Late 1990s- popularity of scooters vanish

& motorcycles come into sight

Reason:-

BAL did not pay attention to design, R&D and customer satisfaction. Apart from this launch of newer and stylish model of motorcycle, critical benefits(mileage) and contemporary technologies in the newer models of motorcycles
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Cont..
BAL shifted its focus:- With Young blood

Rajiv and Sanjiv Bajaj joining the company. The strategies of Bajaj changed. Bajaj focus shifted from targeting present to future. R&D became the key, concept of just in time introduced, no. of vender reduced from 1000 to 200, first plant was shut down for not being cost efficient
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 Demand of gearless scooter rose:- sales of

gearless scooter increased by 20% every year.

Jan 2006:- Hero Honda launched pleasure

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In march 2006:- Chonquing lifan, a Chinese

company planed to set up factory in India. 165cc gearless scooter

In Arpil 2006:- Kinetic launched the blaze, a Bajaj unveiled two new scooter Kristal DTS-I

and Blade DTS-I in late 2006.

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Dec 2009: Bajaj stopped production of scooter During 2009-10, scooter sales in the domestic

market stood at 14,62,507 units compared to 11,48,007 units in the previous fiscal, up 27.40 percent

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Two-wheeler

major Bajaj Auto Ltd, which discontinued production of its only ungeared scooter Wave, will re-enter the segment with a set of ungeared scooters ranging from 75125 cc in the first quarter of next fiscal. Bajaj Auto managing director Rajiv Bajaj confirmed to FE the company's move to launch ungeared scooters. Analysts say Bajaj is also working on a 150 cc-ungeared scooter.
Financial Express 25 August,2011

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Conclusion
To be in market just having a brand

name is not enough, one should look to the changing customer preference.
The most important factor is one

should update with the changing technology else the product will phase out.
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