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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Core essence: Create a market position, rather than chase a slice of the existing
market. Lead with the right brand and the brand will lead you.
Industry insights
Focus on 4P's: The motorcycle industry can be understood on 4Ps - Position, Product,
Performance and Price. Product differentiation can be limited, performance is a given,
and market drives pricing. Thus, only controlable factor is positioning of the product.
On new competition: Difficult to comment till Honda's product launch plans are known.
However, as media reports suggest, its probability of success would be limited if their
low cost 100cc bike targets existing products. Honda's past launches of 4-5 motorcycles
were not successful (except Honda Shine), as targeted towards existing segment.
Company vision and strategy
Continued focus on segment creation in domestic market: It continues to focus
on creating new segments in the domestic market, based on the principle that curiosity
excites and not familiarity. Its to-be-launched Boxer 150cc is aimed at creating a new
segment in rural markets, with high performance but plain looks and a very competitive
price of ~INR42,000 as very few parts are different from its existing product.
Adaptation and specialization: It believes in adaptation. It has adapted to an evolving
market, where it lost its dominance in scooters, by specializing in motorcycles and
sacrificing its plant and retrenching people. It spent ~INR10b to close the plant and
offer VRS. Its specialization in motorcycles has enabled it to align its back-end and
front-end to leverage its product platform, driving smart recovery in performance.
Region-specific export strategy: It started with exports to neighboring markets
that were similar to India, like the ASEAN market and then explored similar markets like
Indonesia, which were more competitive. In Indonesia, it tied up with Kawasaki to
leverage its distribution network to sell Pulsar and Discover. For the African market,
where it faces Chinese competition, it is engaging an offense strategy of creating brands
and selling at premium, which has enabled it to become the market leader. To penetrate
more evolved market like Brazil, it plans to use KTM's brand and network.
Key triggers/milestones/challenges
Four-wheeler launch in FY13; not focused on cars: Its four-wheeler project, which
started as an ultra-low cost car in partnership with Renault-Nissan, has evolved from
the skill sets and cost structure of a two/three-wheeler maker. While it did not disclose
its strategy for four-wheelers, it plans to to evolve its three-wheelers to four-wheelers.
Leveraging KTM investment: It plans to align KTM's frontend and Bajaj's backend to
penetrate Brazil & other developed markets. It has initiated production of KTM 125cc in
India and plans to export ~12,000 units in FY12.
Mr Rajiv Bajaj, Managing Director
of Bajaj Auto, graduated first in class,
with distinction, in Mechanical
Engineering from the University of
Pune in 1988, and then completed
his masters in Manufacturing
Systems Engineering, with
distinction, from the University of
Warwick in 1990.
He has since worked at Bajaj Auto in
the areas of manufacturing and
supply chain (1990-95), R&D and
engineering (1995-2000), marketing
and sales (2000-05) and has been
its Managing Director since April
2005.
His current priority is the application
of the scientific principles of
homoeopathy to the task of building
a brand centered strategy at Bajaj
Auto with the objective of achieving
its vision of being one of the world's
leading motorcycle manufacturers.
Mr Bajaj has been on the Board of
Bajaj Auto since March 2002. He is
also on the Boards of Bajaj Auto
Finance and Bajaj Auto Holdings.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Core essence: Create a market position, rather than chase a slice of the existing
market. Lead with the right brand and the brand will lead you.
Industry insights
Focus on 4P's: The motorcycle industry can be understood on 4Ps - Position, Product,
Performance and Price. Product differentiation can be limited, performance is a given,
and market drives pricing. Thus, only controlable factor is positioning of the product.
On new competition: Difficult to comment till Honda's product launch plans are known.
However, as media reports suggest, its probability of success would be limited if their
low cost 100cc bike targets existing products. Honda's past launches of 4-5 motorcycles
were not successful (except Honda Shine), as targeted towards existing segment.
Company vision and strategy
Continued focus on segment creation in domestic market: It continues to focus
on creating new segments in the domestic market, based on the principle that curiosity
excites and not familiarity. Its to-be-launched Boxer 150cc is aimed at creating a new
segment in rural markets, with high performance but plain looks and a very competitive
price of ~INR42,000 as very few parts are different from its existing product.
Adaptation and specialization: It believes in adaptation. It has adapted to an evolving
market, where it lost its dominance in scooters, by specializing in motorcycles and
sacrificing its plant and retrenching people. It spent ~INR10b to close the plant and
offer VRS. Its specialization in motorcycles has enabled it to align its back-end and
front-end to leverage its product platform, driving smart recovery in performance.
Region-specific export strategy: It started with exports to neighboring markets
that were similar to India, like the ASEAN market and then explored similar markets like
Indonesia, which were more competitive. In Indonesia, it tied up with Kawasaki to
leverage its distribution network to sell Pulsar and Discover. For the African market,
where it faces Chinese competition, it is engaging an offense strategy of creating brands
and selling at premium, which has enabled it to become the market leader. To penetrate
more evolved market like Brazil, it plans to use KTM's brand and network.
Key triggers/milestones/challenges
Four-wheeler launch in FY13; not focused on cars: Its four-wheeler project, which
started as an ultra-low cost car in partnership with Renault-Nissan, has evolved from
the skill sets and cost structure of a two/three-wheeler maker. While it did not disclose
its strategy for four-wheelers, it plans to to evolve its three-wheelers to four-wheelers.
Leveraging KTM investment: It plans to align KTM's frontend and Bajaj's backend to
penetrate Brazil & other developed markets. It has initiated production of KTM 125cc in
India and plans to export ~12,000 units in FY12.
Mr Rajiv Bajaj, Managing Director
of Bajaj Auto, graduated first in class,
with distinction, in Mechanical
Engineering from the University of
Pune in 1988, and then completed
his masters in Manufacturing
Systems Engineering, with
distinction, from the University of
Warwick in 1990.
He has since worked at Bajaj Auto in
the areas of manufacturing and
supply chain (1990-95), R&D and
engineering (1995-2000), marketing
and sales (2000-05) and has been
its Managing Director since April
2005.
His current priority is the application
of the scientific principles of
homoeopathy to the task of building
a brand centered strategy at Bajaj
Auto with the objective of achieving
its vision of being one of the world's
leading motorcycle manufacturers.
Mr Bajaj has been on the Board of
Bajaj Auto since March 2002. He is
also on the Boards of Bajaj Auto
Finance and Bajaj Auto Holdings.
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