Bajaj will not get off 100cc

MONTHS after Bajaj Auto shocked the industry with news that it was exiting the 100cc segment, the company does not seem to be in any hurry to let go of the big volume segment. According to Bajaj Auto GM marketing Amit Nandi: “We are not getting out of the 100cc segment. Rajiv Bajaj’s statement has been misinterpreted. We will continue to sell 100cc bikes till there is demand.” Late last year, the junior Bajaj announced that the company would move out of the bread and butter 100cc four-stroke bike segment and upgrade customer to something more contemporary. “What Rajiv meant was in the long-term we will upgrade customers to something better than what is currently being offered in the 100cc segment. It will be a better offering possibly with a more powerful engine,” explained Nandi. Sources in the know say Bajaj might take up to three years to exit the segment which constitutes nearly 65% of the Indian motorcycle market. Bajaj kickstarted production in its Pantnagar facility with its 100cc Platina, also lowered the price of the bike by Rs 3,000 to pass on the tax-benefit accrued in Uttranchal. The move is expected to hit arch rival Hero Honda where it hurts, since its mainstay the 100cc market is likely to be impacted by Paltina’s lowered prices. According to industry insiders, Bajaj Auto seems prepared to take the price game further, “ Since Bajaj has decided that these products (CT 100 & Platina) do not determine the future of the company in the entry segment, they will squeeze them for all they’ve got. It may not come as a big surprise if Bajaj Auto decides to take a hit in its margin on the 100cc bikes to keep competition in the segment going,” said an analyst with a Mumbai-based brokerage. Bajaj is looking at launching a new motorcycle platform later this year targeted at the entry segment of the market, but this launch is unlikely to spell the end for Bajaj Auto 100cc portfolio in the short term. Bajaj Auto expects demand in the motorcycle market to snap out of its sluggish mode in the first quarter of FY 07. The marriage season that traditionally begins in April often brings with it high sales for automakers, but with interest rates on a climb prospective customers seem to be stalling purchase decisions. Two-wheeler makers have been coping with high stock piles at the dealer end and high delinquency amongst loan takers for the past few months. Motorcycle sales grew around 13% last year ending the year with a whimper as sales volumes in March failed to impress.

Courtesy: EconomicTimes