India's second largest two-wheeler manufacturer, Bajaj Auto Limited (BAL), is increasing its production capacity by 25 per cent to 6.3 million units across its three manufacturing plants. This move is an attempt by the company to face the competition posed by Hero MotoCorp and Honda Motorcycle and Scooter India (HMSI)
Managing Director, Bajaj Auto, Rajiv Bajaj said, “For the current year, we have the capacity to produce and sell five million units. Investments have already been made at our plants. We are looking at increasing productivity to manufacture 6.3 million which will come on-stream next year.”
Hero MotoCorp is planning to establish a fourth manufacturing unit in order to raise the annual capacity of the company to more than seven million units. The company is already building its third plant in the state of Karnataka, which will increase the annual production capacity to four million units as soon as it becomes operational in 2013.
Bajaj will be able to produce 5.7 million two wheelers and 6 lacs three wheelers and four wheelers annually at its Waluj, Chakan and Pantnagar plants, as soon as the capacity enhancement programmes start. The company is all set to sell its first ever four wheeler 'RE 60' in Sri Lanka by the end of 2012 and in India by 2013.
In order to challenge its erstwhile partner, Hero MotoCorp, Honda Motors launched its first ever mass market bike, Dream Yuga 110 cc on 15th May. 70 per cent of the motorcycle market of India belongs to the entry level segment. Bajaj enjoys a hearty 16 per cent, owing to its 'Platina” model. Rajeev said, “We sell about 50,000 units of the Platina every month. As long as there is demand, we will make it. But we are not going to make any investments or marketing efforts on the brand.”
In its place, the auto maker will concentrate more upon developing new variants of the Pulsar and Discover on annual basis. For starters, the Discover 125 Sports Tourer (ST) is scheduled to be released in June 2012, whereas Pulsar 200 NS will hit the roads in July. Bajaj further said, “Our goal is only one. We have to become a bigger, better and stronger motorcycle manufacturer on a global basis. Our every move is aimed at going up the value chain. We want to increase our global market share while maintaining good profitability.”
In order to achieve this, Bajaj is looking at bringing the exports and the domestic sales at the same level followed by increasing the sales volume in foreign countries. BAL is expanding its global network with every passing year especially in Latin America and West Africa. With a figure of 3.8 million units exports, the company enjoys more than ten per cent share in the global motorcycle market with the strength of 35 million. Over the next 2-3 years, the company is hoping half of its sales volume to come from abroad.
In FY 2012, the revenues from exports climbed 45 per cent to Rs. 6,604 crores against Rs. 933 crores, which was 12.5 per cent of total sales in the year 2005-06. Out of the total exports from the company, Africa marks 47 per cent. Other key export markets of the company include Sri Lanka, Philippines and the Latin America. Bajaj auto has included Argentina to its list too after appointing a new distributor in Mexico and the exports will commence within 6 months.
