Bajaj Readying for Ride on Hero’s Turf…

Blueprinting a 100 cc entry-level bike to take on best-selling Splendor and Passion

Bajaj Auto is close to launching a third 100 cc bike — in addition to the Discover and Platina — to take on Hero MotoCorp's bread and butter products, the Splendor and the Passion, as well as Honda's new model at the entry level, the 110 cc Dream

Yuga. Codenamed D-104, the bike is slated for launch in October-November and is expected to be aggressively priced at around. 40,000, a tad lower than its 100 cc and 110 cc rivals.

People close to the development say the new product’s unique selling proposition will be latest technology at an affordable price. They add that the soon-to-be-launched model will have features that are not usually found in the value segment, like perhaps an electric start, a digital instrument cluster, front and rear disc brakes and LED lights. Bajaj Auto will also do away with steel and instead using fibre and plastic to make the two-wheeler lighter, and thereby more fuel-efficient and costcompetitive.

The value segment – which some manufacturers call the ‘commuter premium’ segment – has always been Bajaj Auto’s

bugbear. It has been unable to make inroads into this turf on which Hero MotoCorp accounts for three out of every four bikes sold. Bajaj has in the past tried to crack this market with models like the Caliber and the Wind but had little success. Bajaj Auto managing director & CEO Rajiv Bajaj was unavailable for comment.

In engines with capacity of 110 cc and less, Bajaj Auto with the Boxer, CT, Platina and Discover had sales of 310,723 units in the April to June 2012 period. Hero MotoCorp with the Splendor, Passion, CD Dawn and CD Deluxe sold over four times that number in the same period. It’s this inability of the Pune-based motorcycle maker to make a dent in the entry-level segment that explains why Hero had an overall 45.33% market share in two-wheelers, and Bajaj 17.57% (in the April-June 2012 quarter).

“Currently the ratio of sales in the mass market is 5:1 in favour of the market leader. Launching a mass market product is a good move to get more volumes, although it does not add incrementally to margins,” says Mahantesh Sabarad, senior vice president of equity research at Fortune Financial Services.
What the new bike will be christened is not known. Those aware of the plans say the company is contemplating three options.

The least likely is to opt for a bottom-up strategy and launch a deluxe version of the Platina. The second option would be to introduce a new brand with differentiated features. But a more likely alternative would be to go top-down, which means extending either the Pulsar or creating having another Discover in the 100 cc segment. But taking the Pulsar, which has a sporty and macho image, down to the value-segment could dilute its proposition, said an analyst on the condition of anonymity who reckons a Discover variant may be on the cards.

Bajaj Auto is a leader in the sports segment with the Pulsar (in the above . 60,000 price range), and in the . 50,000-60,000 bandwith the Discover. But it hasn’t been able to funnel those gains towards the largest portion of the pie. Rajiv Bajaj may be hoping that the new 100 cc model will change the game.

Suzuki Motorcycle ties up with IndusInd Bank for retail finance

 Suzuki Motorcycle India Pvt Ltd (SMIPL) today said it has tied up with IndusInd Bank to offer retail financing facility to its customers across the country.

"Suzuki Motorcycle India entered into a preferred tie-up with IndusInd Bank to extend retail finance to Suzuki two-wheeler customers across all 250 SMIPL dealerships," the company said in a statement.

The preferred tie up will provide Suzuki customers an easy retail finance option.

The venture will also enable SMIPL to leverage the reach, expertise and support of IndusInd Bank in order to finance a larger set of customers, it added.

Commenting on the association, SMIPL National Head (Sales Planning and Dealer Development) Rakesh Kumar said: "Suzuki two-wheelers is delighted to be associated with IndusInd Bank. This tie-up gives us an opportunity to serve our customers better by providing easy retail finance for SMIPL products."

Vespa rides on nostalgia in India comeback

Whenever V.K. Bhardwaj, a retired army officer, rides his new Vespa scooter, a rush of adrenaline takes him back to his youth.

New Delhi-based Bhardwaj, 67, who bought a Vespa LX125 in May, said he “started his life” with it and the scooter has been his fantasy. He first bought one in 1962 and still has its number plate clearly etched in his memory.

When Piaggio Vehicles Pvt. Ltd announced last year that it plans to reintroduce the iconic two-wheelers in India, Bhardwaj was among the first to book one.

More than 40 years ago, Piaggio licensed the production of Vespa scooters to Bajaj Auto Ltd. The joint venture ended in 1971. The company formed a partnership with LML Ltd in 1983 to make and sell scooters in India. It exited the venture in 1999 when LML acquired Piaggio’s stake.

In its new avatar, the local unit of the Italian auto maker has positioned the scooter as a premium, lifestyle product aimed at women, college students and the upwardly mobile. That perception went through a sea change in just two months. “Besides the young and trendy, surprisingly, there is a renewed rush of booking and inquiries from senior citizens and people in their early 50s coming to our showrooms to ride their favourite scooter that was an integral part of their lives in younger days,” said Ravi Chopra, chairman and managing director of Piaggio Vehicles Pvt. Ltd, India.

Even octogenarians are taking a Vespa ride.

“We have an 80-year-old customer who bought a yellow-coloured Vespa with a matching yellow coloured helmet,” said Vivek Bengani, director at Delhi-Based Bhawani Motors, a Vespa dealer. “He is truly young at heart.”

Senior citizens comprise a category that Piaggio Vehicles India had almost discounted when it launched Vespa in April. There are more than 5,200 Vespas on Indian roads, according to Chopra.

Priced at Rs.66,661 (ex-showroom, Pune), the Vespa is dearer by at least Rs.20,000 compared with rival automatic scooter brands available in the market. But Vespa’s premium pricing does not appear to deter buyers. Shrestha Malhotra, 21, a Mumbai-based aircraft pilot, bought the scooter because of its head-turning effect. “I have been stopped a zillion times by curious onlookers to enquire about the scooter. Their interest vanishes when they hear that the on-road price for it in Mumbai is Rs.75,000,” he chortles.

While the niche positioning seems to be working for now, the company may face hurdles in India’s price-sensitive market, experts say.

“They are creating an imagery and building romance around the brand to attract the target audience,” said Habeeb Nizamudin, chief growth officer at media agency, Lodestar Universal. Though the scooter market is crowded, there is an opportunity gap with no firm having used this price and brand positioning, he said.

However, he’s not sure if it’s a sustainable strategy.

“This kind of pricing is difficult to sustain,” said an executive from a market research firm, who spoke on condition that neither he nor his firm be named. According to him, in any product category there is a group of novelty seekers who will buy anything new. The actual test begins once the model is a little old.

“Considering that the pricing is way off the mark, it’s difficult for Piaggio to make a mark in the competitive scooter market, which has been expanding at 20% per annum,” he said. It’s not clear whether the auto maker wants to be seen as a niche player or mass one. “It does not fit in either.”

But buyers of Vespa have a different take.

Malhotra, who is impressed by the retro Italian design, said unlike a Honda Activa, the Vespa will always be an exclusive brand in India. If it’s the cute retro look and the vintage badging that attracts those in their 20s, it’s the sense of nostalgia that rekindles the desire to own the Vespa once again for those past their prime.

Meanwhile, Piaggio, which sells the scooter through 50 Vespa stores, plans to add 30 more by September and step up its presence in smaller cities, said Piaggio’s Chopra.

The company produces the scooters at its facility in Baramati, Maharashtra, which can produce 150,000 units a year. Plans are afoot to double capacity in a year’s time.

Piaggio has invested €35 million (around Rs.243 crore) in the facility and plans to put in an additional €20 million to augment capacity.

TVS Motor Q1 net dips 13%

Two-wheeler major TVS Motor Company saw its net profit drop by 13.5% to Rs 51 crore in the first quarter, down from Rs 59 crore in the year-ago period.

Compared to the quarter ended March 2012, profit after tax is down nearly 11%. TVS clocked Rs 57.23 crore in Q4 of last fiscal.

Profits are lower due to "significant increase in brand investments across key brands including TVS Wego, TVS StaR City and TVS Sport along with the recently introduced Apache RTR and Scooty Pep," the company said in a statement on Friday.

The company's revenue, however, increased 4.24% from Rs 1,746 crore last Q1 to Rs 1,820 crore for the quarter ended June 2012. Profit before tax was down 15% at Rs 66 crore against Rs 78 crore clocked last fiscal.

Analysts had expected TVS' net profits to shrink much more. So, the stock gained in the stock market. Auto analysts said part of the reason why the street expected worse from TVS was because of its Indonesian venture which has not been doing too well. PT TVS Motor Company Indonesia saw two wheeler sales drop 14% this quarter to 6,041 units down from 7,035 units sold last Q1.

Overall domestic sales were also flat given the general sluggishness that has crept into the two-wheeler industry. TVS saw its overall sales remain flat for the quarter at 5.47 lakh units and nearly all the segments recorded various levels of degrowth.

Motorcycles clocked sales of 2.06 lakh units, down 8% compared to the 2.24 lakh units sold last Q1. Scooter sales were flat at 1.20 lakh units compared to 1.19 lakh units last year. Two wheeler exports too saw a nearly 22% dip - down to 0.61 lakh units in the current quarter against 0.78 lakh units last Q1.

Yamaha to Wear Made-in-India Tag

Yamaha to Wear Made-in-India Tag

India Yamaha Motor to export 300 R15 bikes to Japan

Twenty seven years after setting up a manufacturing base in India, Yamaha Motor Company’s Indian subsidiary will export sports bikes to Japan, in what is a first in the history of Indian two-wheeler industry.

ET learns that India Yamaha Motor, the subsidiary of the Japanese two-wheeler company, will be exporting its first shipment of 300 deluxe motorcycles of R15, a 150-cc sports bike manufactured at its plant in Surajpur. The idea is to test the product in the Japanese market, and if the response is good, the company may even begin the exports of another deluxe motorcycle, FZ, to its home market.

Confirming the development, Hiroyaki Suzuki, MD, India Yamaha Motor, told ET, “The motorcycles manufactured in India meet the advanced specification of developed markets and they are produced at a lower cost. We are sending shipments of the R15 to Japan, to test-market it in the Japanese market and, if the response is good, we may explore more products to export to Japan and other advanced markets.” “The Japanese market is a market for big bikes and racing motorcycles and, within that, the 150-cc segment is emerging. Our R15 fits the image; not only is it easy to race and manoeuvre, but it could be an ideal choice for entrylevel racing,” added Suzuki.

Annually, about 4,00,000 units of two wheelers are sold in Japan, with a large part of the market being dominated by the 50-cc scooter market and the balance making up for big bikes of 250 cc, 400 cc, 600 cc and above. R15 commands a price tag of Rs 1.15 lakh on Indian roads, but in Japan, it will sell at 3.42 lakh yen or Rs 2.45 lakh.

The Indian MD explained that once Yamaha’s sales team in Japan is able to ascertain the demand for the products, the Japanese team will give the Indian team an indication of the demand for ‘made in India’ bikes for export to Japan. “If the response is good, our next target would be Europe,” says Suzuki. Exports of two wheelers from India is nothing new. Bajaj Auto and TVS Motors export two wheelers to markets in Africa, Latin America and the Asean countries, but Yamaha’s move to reach out to the developed markets from India is something new.

Hero's Rajasthan R&D centre to be largest such

Hero MotoCorp Ltd, the biggest two-wheeler maker in the country, on Wednesday announced that it is going to come up with an integrated state-of-the-art research and development (R&D) center in Rajasthan.

The R&D facility would cover more than 250 acres at Kukas in Jaipur and it is going to be the biggest two-wheeler R&D facility in India, said Hero MotoCorp via a statement. In the meantime, Hero MotoCorp Zonal-Head (South) A Srinivasulu rolled-out the firm’s new product in Chennai, the 125cc motorcycle ‘Ignitor’.

After breaking away from its Japanese partner Honda Motor Co Ltd, this is the third two wheeler model launched by the Hero MotoCorp that is priced between Rs 56,996 and Rs 59,031 (ex-showroom Chennai) for the top-end version, said Srinivasulu.

The company introduced the 150cc motorcycle Impulse and scooter Maestro under the ‘Hero’ brand in 2012. According to Srinivasulu, the firm sells around 40,000 units in Tamil Nadu. He is also expecting the new offering to enhance sales of Ignitor under the 125cc segment.

The new motorcycle comes fitted with an ATFT engine and produces a peak power of 11PS at 8,000rpm. It is also equipped with features such as digital-analog combo meter console, front cowl and adjusted rear shock absorbers. It will have pearl white, sports red, vibrant blue, and panther black metallic color options.

Deepika Padukone to endorse Yamaha scooters

After TVS and Hero signing up Anushka Sharma and Priyanka Chopra as brand ambassadors respectively for their gearless scooters, Yamaha has signed up Deepika Padukone as the brand ambassador for  its new gearless scooter range. The sensuous diva will make her debut appearance in the advertisements for the Yamaha Ray. During the 2012 Delhi Auto Expo, Yamaha heralded the Ray as female specific.

“We are very pleased with our alliance with Deepika Padukone to endorse our scooter ‘Ray’ which just like Deepika signifies cool and beauty. Being young, fit, sporty and stylish, Deepika has all the elements that our customers will subscribe to when they buy our scooters. The youth adore her, respect her and follow her because she signifies an inherent sense of style that easily blends in with that of brand Yamaha. We look forward to have a longstanding and fruitful association with her,” said Hiroyuki Suzuki, CEO and MD, India Yamaha Motor.

The Yamaha Ray will be launched around Diwali this year and according to the company, is targeted at customers below 24 years of age. Currently Yamaha sells 13 bikes, namely the Crux, YBR 110, YBR 125, SS125, SZ-X, SZ-R, FZ16, FZ-S, Fazer, YZF-R15 and three superbikes, the FZ1, VMAX and the YZF R1