Bajaj's Discover looks to overtake Splendor

Bajaj Auto Ltd, the country's second largest motorcycle maker, is aiming to overtake market leader Hero Honda Motors Ltd's Splendor brand in the October quarter, a top official claimed. S. Sridhar, chief executive officer at Bajaj Auto, said its Discover brand will challenge the Splendor brand, which has been the market leader in the entry-level segment for 15 years. According to him, in the three months ended June, Hero Honda sold 167,231 units of all Splendor variants against 146,993 units in the corresponding period last fiscal, while Bajaj sold 100,977 units of its Discover brands, which include a 150cc variant, against 24,293 in the last fiscal. Sridhar said the company is encouraged by the response to the Discover, which was relaunched in July 2009 with a 100cc model--a 150cc variant was added in May--and expects it to become the leading brand by October this year, after the production capacity for the bikes reach 160,000 units per month from the current 150,000 units. A Hero Honda spokesman, however, declined to confirm those numbers, saying it was not a "like-to-like comparison". Besides, he said, the Splendor Plus alone has annual sales of at least a million units, a number that is higher when the NXG and Super Splendor variants are counted. The Splendor is also the world's largest selling motorcycle brand. Hero Honda does not disclose model specific sales "Splendor and Passion are the only million-plus unit two-wheeler brands in the country and continue to grow strongly," the spokesman said. Passion is an entry-level motorcycle from Hero Honda. An analyst who tracks the two companies, too, was sceptical that Bajaj could overtake the Splendor. Mahantesh Sabarad, a senior analyst at Fortune Equity Brokers Pvt. Ltd, said Bajaj's smaller distribution network could pose a challenge. "Hero Honda has deeper inroads in the rural and semi-urban pockets. While they (Bajaj), have a good product, they don't have that wide a reach," he said. However, Sridhar said the company has learnt its lessons from past mistakes, and that the Discover and its variants in the so-called commuter segment will now be the key volume generator. This segment, he said, accounts for 80% of bikes sold in the country. In the past, Bajaj's strategy of lower pricing failed to dent Hero Honda's market share, and subsequent offerings like XCD and Platina were also unsuccessful in drawing buyers. It also did not help that there was little brand familiarity. Sridhar said the company realised that packaging a bike with sporty features alone was not enough. The new strategy to attract customers, who look for familiarity as well as frugality, is paying off now, with the company increasing its share in the commuter segment to 30% in the June quarter, from 22% in year-ago period.