Bajaj Auto Ltd: Overtaken in the

Indian Scooter Market

BY :
SAMYAK AGARWAL [M-703]
VAIBHAV AGARWAL [M-704]

Overview
Founded in 1926 by JamnaLal Bajaj.
His son, Kamalnayan Bajaj, then 27, took over the reins of
business in 1942.
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, 2007 as a wholly
owned subsidiary of erstwhile Bajaj Auto Ltd (the holding
company) with the name Bajaj Investment & Holding Ltd. The
company received the certificate of commencement of business
on May 7, 2007.

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, product
development, process engineering and low-cost
manufacturing skills.

INTRODUCTION
In the mid -1940s,BAL started as an important of two and threewheelers .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.
Bals first scooter model under the Bajaj brand was introduced in
1972.(Chetak)
In the late 1990s the Indian two wheeler market witnessed a shift in
consumer preferences.
In 2005-06 scooter sales in the Indian market were around 1 million
units annually and consisted predominantly of gearless scooters. In
early 2006 BAL announced that it would launch two new models of
gearless scooters in 2006-07.

CSR
Bajaj Auto is committed to nation-building and
contributing to the uplift and development of the
weaker sections of society. This is a legacy of the
founders, Jamanalalji, Kamalnayanji and Ramkrishna
Bajaj.
Jankidevi Bajaj Gram Vikas Sanstha (JBGVS)
Samaj Seva Kendra.
Kamalnayan Bajaj Hospital

BACKGROUND NOTE:
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- Started selling scooters under the Bajaj brand
1972- BAL Introduced the Bajaj Chetak scooters.
1975- BAL entered into a joint venture with western
Maharashtra Development corporation.

Cont

BACKGROUND Cont..
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.
2000:- Bal launched the Saffire, a gearless scooter.
2001:- It introduced the Pulsar.
2004:- Bal created a new Logo.
2005:- The Saffire was relaunched as the Wave.
2006:- Bal launched the Platina.
2006:- Indian two wheeler industry was the second largest in
the world.

BAL & the Indian Two-Wheeler

Market.

1950s -1980s: "License Raj .

Domestic market protected-Govt.restriction.
1950s-Automobile Products of India(API).
Other players:
Enfield(Bullet),Escorts(Rajdoot),Jawa(Yezdi).
1960s:Govt.relaxation to domestic companies.
1970s: BAL manufacture scooters under the "Bajaj
Brand.
Scooter were more preferred to motorcycles.2wheelers demand increased due to inefficient
transport system, the Chetak & the Super launched.

Contd
It act as Sellers Market like other consumer goods &
customers had to wait for many years for delivery.
(10-12 yrs for Bajaj Chetak).
It plays a major role in dowry in India.
1970s-1980s-Govt. introduced MRTP Act & FERA.
Indian manufacturing motorcycles were not fuel
efficient, results low sell.
GoI changed several policies in 1970s & early 1980s
to give impetus to auto industry.
Focus on :modernization, technology upgradations,&
healthy competitions in domestic market.

Motorcycle segment
Joint Venture: Foreign players had only option)
Many players like Honda,Suzuki,Yamaha had joint ventures
with Indian companies.
The foreign players came with latest technology, efficient
production system etc that enhance the quality of the motorcycle
in India .
Soon new models come with new style, advanced technology &
fuel efficient.
Scooter segment
LML entered into joint venture with Piaggio in 1982 , to
produce Vespa, sold well in 1980s-1990s after Chetak.
1984:The Kinetic tied up with Honda ,introduced new models ,
new features like self start & automatic gear transmissions.
1980-1990s :BAL dominate by Chetak & Super model with their
values for money appeal durability, versatility, low
maintenance,avaliablity of spare parts ,etc.Hamara Bajaj add

The Turning Point:

In 1991 & 1992 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%)
However, in 1990, the pattern of demand changed &
motorcycles became the fastest growing segment
Motorcycles were preferred to scooters in the rural areas
because of poor road conditions
Demographic changes Increasing proportion of younger
people in the overall population

Cont..

Lower interest rates on vehicle loans made motorcycles more

affordable
Sales of motorcycles surpassed that of scooters for the first
time in 1999 (with Hero Honda SPLENDOR)
In 1999-2000 scooter sales fell by around 75,000 units, while
motorcycle sales increased by more than 400,000 units
BAL had volumes falling 40% year-on-year as scooters were
80% of their total business
In 2000 Bharat Stage II, a new set of emission norms, came
into effect. It was for petrol two-stroke engines & it gave a
blow to BAL, which primarily sold two-wheelers with twostroke engines

BAL FIGHTS BACK

Category

FY 2001

FY 2000

Growth (%)

Geared Scooters

426,334

757,714

-43.7

Un Geared
Scooters

78,892

69,726

13.1

Mopeds

121,238

176,961

-31.5

Motorcycles

427,088

254,847

67.6

Total twoFailed
wheelers

1,053,552

1,259,248

-16.3

to anticipate consumer response.

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.

BAJAJ HAS RECORD FY 2010, TARGETS 4 MILLION

VEHICLES IN FY 2011
Particulars

April ~ March
2010

April ~ March
2009

Growth %

MOTORCYCLES

2,506,749

1,907,853

31

TOTAL 2
WHEELERS

2,511,600

1,919,625

31

Change Portfolio

New launch gave

wider range
Refresh image.

Oct 2010 sales Data For Domestic Market

Others; 8%
3w; 16%

Pulsar; 29%

Discover; 48%

Rebranding of Hamara Bajaj

The Flying

Brand Positioning
Statement

DEFiNiTELY
MALE

Trying to resurrect Scooter

sales

Trying to Resurrect Scooter Sales

Price differential between scooter and motorcycles had
narrowed.
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 at 25% per
annum.
Main purchaser of gearless scooters were teenagers, women,
and older people.
In 1999-2000, BAL had a market share of 20% in this
segment. In 2000 BAL introduced a new gearless scooter with
a four stoke engine Saffire.
In 2002, the Legend NXT 2, a four stroke geared scooter that
was claimed to offer a motorcycle like mileage of 60-70kmpl
was launched

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

the Activa within just three months of its launch in 2001.
Kinetic launched the Nova, another gearless scooter in 2002,
which also become quite popular.
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.
In 2004 Chetak was introduced with a new gear system called
wondergear in which no gear shifting require.
New ad campaigns were also launched to brush up the Chetaks
image.
BAL was forced to phase out several models including the
Spirit, the Sunny Spice, the Legend and NXT 2, and the
Barvo.The Saffire, reportedly, suffered from several technical
problems. It was replaced by Wave 2005.

The Fall OF An Icon

In Jan 2006, BAL announced that it had stopped
production of the Chetak. So that the company could
upgrade its scooter portfolio and regain the title of
Indias largest scooter manufacturer.
Chetak had to phase out because BAL had neglected
it in terms of design, technology, and innovation.
Chetak had remained unchanged for more than 30
years. Customer used to call it car on two wheels.
At that time BAL had just one scooter model, the
Wave. By 2005-2006 HMSI was leader in scooter
segment with 50% market share.

Outlook:
Late 1990s- popularity of scooters vanish &
motorcycles come into sight
Reason- uncared for this segment, mileage
problem and fashionable technology design &
launch of new motorcycles model
Demand of gearless scooter was set to rise(20%
every year)
Reason- Trendy Style, better technology &
mileage, targeted to women and aged people,
easy to function

 Auto expo 2006 (New Delhi), BAL Launched two

new gearless scooters
Kristal DTS-I (100cc); Target- Teenage Girls
Blade DTS-I (150cc); Target- Young Males

Continued
The case traces the company's rise to dominance in
the scooter segment of the market, and its eventual
fall, against a backdrop of changes in customer tastes
and preferences.
It describes the reasons for the shift in demand and
discusses the initiatives that the company undertook
to regain lost ground. The case also discusses the
competition in the Indian scooter market, and ends
with a brief discussion on recent developments in the
two-wheeler market.

Images of Bajaj Bikes:

Thank you