'Hamara Bajaj' making comeback in Scooters!
As expected, Bajaj Auto is re-entering the scooter segment after five long years. According to reports, the company is making a comeback with its iconic ‘Chetak’ in a new, modern avatar
 
Bajaj Auto Ltd, the company famous for its 'Priya', 'Chetak' and ‘Super’ brands of scooters until last decade, which in 2009 decided to call it quits for scooters, is now making a comeback in the segment. According to Autocar India, Bajaj is working towards making a reentry into the scooter market with the 'Chetak' brand.
 
"It’s still early days, and no details are presently available about the upcoming new Chetak, which we guess should be seen by around the Indian Auto Expo 2016. We expect Bajaj will power the new Chetak with a four-stroke, single-cylinder and air-cooled engine, displacing somewhere in the region of 125-150cc. The new Bajaj powerplant can be expected to offer gearless ease, unlike old Chetak scooters," the report says.
 
This was bound to happen. In 2009, Rajiv Bajaj, managing director of the company, announced the company’s plans to exit the scooter segment by end of the fiscal year to focus exclusively on motorcycles in the two-wheeler category, as part of Bajaj Auto’s goal to become the world's biggest motorcycle maker in the future.
 
 
His father, Rahul Bajaj, who made the scooters popular with its 'Hamara Bajaj' campaign, was also saddened by his son's decision to exit from this segment. “I feel bad, I feel hurt," Rahul Bajaj had said at that time, but son Rajiv insisted that solutions should be drawn from logic more than emotions. "I care less for a solution from emotions, I believe more in the magic of logic," Rajiv Bajaj had said at that time.
 
"I can't say harm the company and its shareholders by doing something you should not do. But I am still not convinced. He (Rajiv) has tried to explain it (the move) to me," Rahul Bajaj said in a TV interview at that time.
 
The company that by and large created the scooter market in the country through its popular 'Hamara Bajaj' campaigns in 1980s and 90s, was selling just one scooter category—the 100-cc gearless ‘Crystal’ when it decided to exit the segment.
 
Rajiv Bajaj, while launching its 135-cc Pulsar bike in December 2009 had said, "We will exit the scooter market because we don't see much sense in it. If we are to be a motorcycle specialist, we cannot make scooters. Scooters did not sell according to our expectations. We are making hardly 1,000 scooters a month now and mostly for exports. Now our focus is on motorcycles."
 
 
At that time, I had said that one day the company will make a re-entry into the scooter segment, which was its bread and butter before it launched the Pulsar range of bikes. Near the end December 2009, I wrote, "In effect, the scooter segment of Bajaj seems to have died an unnatural and untimely death mainly due to lack of support from the family. But looking at the company's—especially Mr Rajiv Bajaj's stance in the past—I wonder if it will start making and selling scooters again. After all, not so long ago, Bajaj did an about-turn on its decision to exit from the 100-cc motorcycle segment after failing to catch up with market leader Hero Honda, after the success of Bajaj's higher-end models like the ‘Pulsar’. In July 2009, Bajaj re-entered the 100cc motorcycle segment with a better product in its 'Discover'."
 
India's market is divided roughly into two categories, urban and rural, depending on the needs and resources of consumers in these areas. For example, pricing and fuel efficiency matters most for rural consumers whereas the urban consumer would prefer more power and style in a motorcycle.
 
In an effort to capture the younger, tech-savvy urban consumer market, Bajaj ignored the rural market and had not launched any new variant in the 100-cc motorcycle segment since 2007 till its re-entry in July 2009. These 100-cc motorcycles offer a better mileage at a lower cost compared with motorcycles in the above 100-cc categories and are therefore preferred in rural areas. 
 
Not to forget, after shifting focus to the Pulsar range, and thus ignoring entry-level bikes, Bajaj in January this year, re-launched its new Platina in 100-cc category with better mileage. This time, the company claims that the new Platina ES (electric start) gives a mileage of 96.9km per litre, the world's highest in this category. 
 
Therefore, it is not surprising that Bajaj wants to re-enter scooter segment. However, by focussing entirely on the motorcycle segment and thus ignoring scooter altogether Bajaj has lost a big opportunity. Remember, during all the slowdown, it is the scooter segment, especially variants from Honda Motorcycle & Scooter India Pvt Ltd (HMSI), the unit of Japanese Honda Motor Co Ltd had kept its volumes soaring. In fact, even today, there is a certain waiting period (varies from location to location and dealer to dealer, but about one month) for Honda Activa, which is now into its third generation mode.
 
Not only that, scooters made by Hero MotoCorp (erstwhile Hero Honda), TVS Motor Co Ltd, Suzuki Motorcycle India Pvt Ltd, Mahindra Two Wheelers Ltd and Vespa are also selling like hot cakes. In fact, it was the delay in delivery by Honda that seems to have helped others, especially Suzuki, TVS Motors and Mahindra to capture a significant market share. Unfortunately, Bajaj, the once the 'king of scooters', was nowhere in the picture.
 
So besides dwindling sales, what were the reasons for Bajaj to move away from the scooter segment? According to Veeresh Malik, consulting editor of Moneylife, one of the reasons could be inter-changeable spares between Bajaj scooters and its three-wheelers. Spares for Bajaj scooters were cheaper compared to its three-wheelers, and therefore often used by owners and mechanics. In addition, the spares for scooters, made by other manufacturers, were easily available across the markets thus depriving Bajaj the profit margin.
 
Nevertheless, much has changed since Bajaj decided to quit the scooter segment. At present, almost all scooters in the market are gearless, unlike the ones sold by Bajaj before its exit. And considering the difference in mechanism of geared and gearless engines, it makes more sense for Bajaj to re-enter the scooter market with a gearless variant. This way, the company can also ensure that scooter spares are unusable for its three-wheelers.
 
Coming back to number game, according to the Society of Indian Automobile Manufacturers (SIAM), in February 2015 scooter volumes jumped 18.8% to 3.70 lakh units from 3.12 units, same month last year. At the same time, motorcycle volumes declined 8.22% to 7.77 lakh units.
 
Even the cumulative figures between April 2014 and February 2015 are in favour of scooters. During the 11 months of FY2015, scooter volumes grew 26.6% to 41.1 lakh units, while motorcycle sales increased marginally 3.2% to 98.84 lakh units, data from SIAM shows.
 
Another interesting takeout from the SIAM report is that except Bajaj, all other two-wheeler makers are present across categories, be it Honda, Hero MotoCorp, TVS Motors, Suzuki or Mahindra. In short, by balancing their offerings in both scooters and motorcycles, these manufacturers are making sure to survive unexpected setbacks from each category. Since Bajaj exited from scooters, it did not have the same benefit and had to depend solely on motorcycle sales.
 
Hope the company had learned its lesson and would now make an effort to re-launch its iconic 'Chetak' by incorporating fresh R&D ideas and improved features like autogears, performance and better mileage. Remember, the absence of these factors had forced Bajaj to quit the scooter segment. One of the biggest factors in favour of the company is the Bajaj brand name and its ability to cater to customers across the country with its huge dealer network and service centres. In addition, Bajaj has the capability to surprise competitors with its ‘minimum margin, maximum volume’ strategy. In short, Bajaj needs to re-enter the market with a new ‘Chetak’ that has about 110cc engine, is spacious, gives a mileage of over 60kmpl and prices at around Rs45,000. This recipe can sure give Bajaj a foothold in the scooter market and help it regain market share. 
 
Will Rajiv Bajaj's 'magic of logic' comeback into its once 'famed' scooter segment make his father Rahul Bajaj smile again?
 
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Comments
MOHAN
7 years ago
Bajaj must come out with scooters with gears. Market is flooded with low mileage gearless scooters. I think a modern scooter with gears can boost up Bajaj sales and it will make Rahul bajaj smile again.
Ganesh Johnson
Replied to MOHAN comment 7 years ago
Totally flawed logic, that does not take into account the changed market demographics. Go to any scooter dealer today, and you see 16 and 17 year old boys and girls with stars in their eyes, who have dragged their mom and dad - to buy their FIRST scooter! This scooter has to be 100 (or so) CC, gearless, because thats all that a 16 year old is allowed to drive till he/she turns 18. That is the segment Honda captured perfectly, and Rajiv Bajaj was left watching helplessly. India's demographic is incredibly in favor of these 16 and 17 year olds who are being indulged by their doting parents who plonk 50 Thousand rupees and buy their boys and girls a trendy scooter. These kids won't accept another Bajaj clunker that needs heavy gear shifts. The market is for a smart, trendy, gearless scooter. Mr. Yogesh is perfectly correct about what the new Bajaj product should be!
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