Bajaj Plans Bigger Pulsar & KTM to Take on Rivals

Bajaj Auto, the county's second-largest two-wheeler maker, will launch bigger and more powerful Pulsar and KTM motorcycle models in the 200cc to 700 cc range over the next few years to take on rivals Honda, Yamaha and Suzuki and build on its leadership position in the premium motorcycle space.

Bajaj aims to position the Pulsar in the value-for-money sports bike segment and Austrian partner KTM's motorcycles at the premium end of the market.

"We share the same development process with KTM, so you can expect there will be 'a much bigger Pulsar' next year, because we think the market is at an inflection point (at the premium end) and we are in a good position to take advantage with these two brands," managing director Rajiv Bajaj said.

Bajaj said the company will come out with 350cc Pulsar next year and it is exploring even bigger motorcycles under the Pulsar brand. "There will be a 350 cc Duke next year, so you can expect something similar with the Pulsar next year. And going forward, in 2014-15 there will be even bigger KTM and even bigger Pulsar," Bajaj said.

The company is gearing up with the capacity of 1 00,000 units at its Chakan plant to cater the new range of Pulsars and KTM motorcycles. On Monday, Bajaj unveiled its Pulsar 200 NS (naked sport), which will compete against Yamaha R15 and Honda CBR 250R. The motorcycle is likely to be priced below Rs 1 lakh.

The launch followed KTM bringing in its Duke 200 last week with a price tag of Rs 1.16 lakh. Both motorcycles have been jointly developed by Bajaj and KTM. The two companies are likely to jointly bring in 350 cc and 690 cc motorcycles under the Bajaj banner over the next few years. The joint R&D for vehicle and engine development will help the company to maintain the cost and help itself maintain a 20% EBIDTA margins

And the price positioning will be similar in bigger models for Pulsar and KTM, the Indian brand at the lower end and KTM at the premium end.

The next generation Pulsar motorcycles (200cc, 350 cc and above) will co-exist with the current range of Pulsars. With bigger motorcycles expected from the Japanese competition, experts say this Bajaj-KTM twin strategy should work for the company to cater to different end of the market.

Bajaj said the new motorcycles would help the company increase market share to 30-32%, from 26% now, as the market for premium-end motorcycles is expanding fast.

Experts say that with a rise in disposable income, the number of buyers will grow, but the segment will continue to be niche as the price bracket exceeds Rs 1 lakh.

"The market is growing, yet it forms less than 1% of the overall motorcycle market in the country. The sports bike category will continue to grow in double digits and there will be takers, yet it will form only 1%-2% of the market and it will be niche category, at least in the medium term," said Mahantesh Sabarad, auto analyst with Fortune Broking.

Bajaj Auto, which has an export turnover of nearly 6,500 crore with almost 1.5 million vehicles shipped annually sees the similar strategy being played out in the global markets too.

"I think this strategy of KTM-Pulsar acting together in the sports segment is a valid strategy anywhere in the world not just in India. We will look at leveraging this in many of our overseas markets in Latin America, Africa and South East Asia," said Bajaj.