Bajaj Auto Ltd, which once produced the iconic Chetak scooters, will steer clear of the scooter segment even while Honda’s Activa emerged as India’s largest selling two-wheeler brand in September.
With sales of 1.42 lakh units, it was way ahead of popular motorcycle models like the Splendor, the Passion and the Discover.
Yet Rajiv Bajaj does not believe this is the beginning of a rapid shift in customer preference to scooters. On the contrary, it is just a sign that the motorcycle segment has “far greater competition” than scooters.
“Hence, no single brand is able to corner such a large volume (among motorcycles),” said the Managing Director of Bajaj Auto.
Motorcycles still account for a lion’s share of the country’s annual production of over 14 million two-wheelers. But scooters have been growing rapidly at 20 per cent, with the Activa at the top. This, in turn, has prompted a host of manufacturers to throw their hats into the ring.
The list includes Yamaha, which launched the Ray as part of efforts to expand its India presence after being in the wilderness for long. The company believes the scooter business is the best bet, at least for now.
Hero MotoCorp, TVS Motor Co, Suzuki Motorcycle and Piaggio are also betting big on scooters even as they have motorcycles to offer. The exception has been Bajaj, which, till a few years ago, was synonymous with the Chetak geared scooter. It decided to exit the space to become a specialist motorcycle maker.
Market for all
Even while die-hard ‘Hamara Bajaj’ sentimentalists will more than welcome a comeback in scooters, the company’s MD will have none of it. “In a large country like India, there will always be a market for both scooters and bikes. The rewards will be reaped by those who focus on dominating one or two categories as opposed to participating in all. Ultimately, the proof of strategy is in sustainable profits,” said Bajaj.
That the company has been clocking EBITDA (earnings before interest, tax, depreciation and amortisation) margins of over 20 per cent for some years now is a clear indication that things are firmly in place. It also has global brands like KTM and Kawasaki in its bike portfolio.
For the moment, there is really no compelling reason for Bajaj Auto to contemplate a scooter comeback.
Motorcycles continue to be the preferred choice of transport for most commuters even though growth has been relatively muted for a while now. It also explains why, despite the success of the Activa, Honda is keen on getting bigger numbers in motorcycles. .