Bajaj Auto Plans To Cut Entry-level Motorcycle Models By A Third

plans to reduce the number of entry-level models in the motorcycle market by a third as it seeks to sharpen its portfolio and reduce the working capital burden on its dealers, the company’s top officials said.

“We are in the process of sharpening our product portfolio,” Rakesh Sharma, executive director of Bajaj Auto, told Business Standard, adding that the move will include reducing the number of offerings at least by one-third. “A very high number of variants add to the working capital burden of the dealers,” Sharma said.

“We haven’t received any such communication from the company as yet, but if they are considering this it will indeed be a big relief as maintaining such a large SKU (stock keeping unit) is a headache for us,” said a dealer.

The Pune-based company sells the Platina and CT brands in the entry-level (100-110cc) segment. Between the two brands there are about a dozen variants, which are differentiated by type of brakes, wheels, and start technology, among others.

The entry-level or the mileage segment has been the stronghold of market leader Hero MotoCorp, which sells the Deluxe, Passion and Splendor models.

On back of new model launches and an aggressive pricing, Bajaj has been gaining ground. Its share in the segment increased to 15.5 per cent in financial year 2020-21 from 14.3 per cent a year ago. It sold over 110,000 units of its two brands in FY20, the company said on Wednesday.

ALSO READ: Covid-19 crisis: In 2020, housing launches fell below demonetisation levels

Since the outbreak of the Covid-19 pandemic, demand for cheaper motorcycles has gained traction because of an aversion to public transport. Motorcycles sales have been improving sequentially and have reached 80-85 per cent of pre-Covid levels in July for most firms.

chart

While Hero has seen demand for such models advance at a brisk pace in rural India, Bajaj has seen demand rise in urban markets, said the Bajaj dealer cited above.

“We are seeing a new set of buyers emerge. All those who never owned a motorcycle are coming into the market as they do not want to use public transport,” he added. Meanwhile, sales of pricier brands such as Pulsar have taken a knock its core target group, college-goers, remain confined to homes as educational institutions are shut because of the pandemic. Sales have also been impacted by the increase in prices because of the shift to BS-VI, he added.

Meanwhile, despite the pandemic and the weakened purchasing power, Bajaj’s Sharma said there is no trend among buyers “to downshift” or opting for cheaper models. Wherever the overall proposition is strong, models are selling and vice versa. It is applicable across the segment, he added. The share of the Pulsar brand in company’s total sales rose to 50 per cent in Q1FY21 from 40 per cent a year ago.

RECENT NEWS

Central Banks And The Economic Horizon: Steering Through Uncertaintie

In the evolving landscape of global financial markets, the strategic role of central banks has come under intense scruti... Read more

Transforming Financial Operations With Robotic Process Automation

Author: Ricardo Goulart                           ... Read more

The Role Of Machine Learning In Fraud Detection

        Author: Gerardine Lucero                  &nbsp... Read more

Principles Of Islamic Banking And Finance

When it comes to banking, a significant new contender has entered the ring. The principles of Islamic banking and financ... Read more

The Role Of Central Banks In Global Economy

The role of central banks in global economy is a stimulating topic that requires profound understanding. Commonly, centr... Read more

History Of Banking Evolution In The 21st Century

Throughout time, the banking sector has assumed a central role in the smooth functioning of economies, generating growth... Read more