Even as the motorcycle market in the country witnessed a marginal decline in the first six months of the current fiscal, Bajaj Auto Ltd has increased its market share, according to a senior executive of BAL.
He said the company was also the most profitable automobile manufacturer in India as its performance in the latest quarter showed.
Speaking to presspersons in Coimbatore on Wednesday, K. Srinivas, President-Motorcycle Business, Bajaj Auto Ltd, Pune, said the motorcycle market had decelerated 1 per cent in the first six months of the current financial year. Even in this challenging market environment, he said Bajaj Auto was able to increase its market share compared to its competitors.
He said the market share of BAL had grown from 25 per cent to 27 per cent during this period. In September, its market share had gone up to 28 per cent. In the first eight days of Dussehra festival, Bajaj Auto’s retail sales witnessed a 6 per cent growth compared to the same Dussehra season last year. But the two seasons are not comparable since during last year, Diwali too was celebrated in October while this year there is a three-week gap between the two festivals. Srinivas attributed the growth during the Dussehra season this year to the slew of new launches the company had made so far in the current FY-Discover 4G, Pulsar 200 and Discover 125 ST. Last month, 40,000 Discover 125 ST were sold and this month he expected this to touch 45,000 units. He said this bike has been a runaway success because the commuter segment has a product that had all the trappings of a sports segment vehicle.
He said there has been a major shift in customer preference in the last decade in the three bike segments- 100 cc, 125 cc and sports bikes of 150 cc +. From accounting for 4 per cent of the entire market eight years ago, the sports bikes’ market share has gone up to 17 per cent aided largely by the launch of Bajaj’s Pulsar brand. The 125 cc bike segment’s share too was at 17 per cent and this segment has grown by more than 30 per cent in the last 2 years. He said the A segment consisting of 100 cc bikes was actually “de-growing now”.
Asked whether Discover brand would cannibalise the share of BAL’s own Pulsar brand as they had some overlapping cubic capacity, he said it was not capacity alone that decided customer choice. Brand “is more powerful than products” and Pulsar and Discover served entirely different set of customers and Pulsar 150 that costs about 30-40 per cent more than Discover 150 sells three times more than Discover 150.
He said because of the constraints faced by vendors, the production of Discover 125 ST could not be ramped up to meet increasing demand. But this issue would be sorted out shortly by the suppliers. At present, the export of Discover models was around 10,000 units a month. Once the production volume went up, the exports would go up. He expected the production of Discover models to go up from around 1.22 lakh units a month now to 1.50 lakh vehicles in one or two months.
Srinivas said BAL would focus on Pulsar, which was India’s largest selling sports bike, and Discover, which in September emerged the world’s largest selling commuter bike.
Referring to financials, he said Hero MotoCorp sold about 5 lakh bikes a month whereas BAL sold about 3 lakh units, including exports.
But while Bajaj’s profit after tax was Rs 741 crore in Q2 of 2012-13, Hero Motocorp’s net profit was Rs 441 crore. While BAL’s EBITA was 19 per cent, its competitor’s EBITA was 13 per cent. He said Bajaj Auto was the “most profitable automobile company in India”. This was possible as “our products command a premium in the market” he said.
What was significant was BAL earned much higher profit than its rival despite earning marginally less. In Q2 of this year, Bajaj Auto’s revenue was Rs 4,972.40 crore compared to Rs 5,187.46 crore of Hero MotoCorp. But Bajaj Auto earned a net profit that was about Rs 300 crore more than its competitor.