Bajaj will stop manufacturing scooters
Bajaj Auto, a name synonymous with scooters, will stop producing the vehicle in the next three months. The company which brought scooters into India with Vespa, has said that it sees no option but to revert to the more profitable motorcycle segment.
IN 1961, Bajaj Auto got a manufacturing license from Italy’s Piaggio and began manufacturing and selling scooters under the brand name Vespa. In the seventies, when Piaggio refused to renew its license, Bajaj began manufacturing scooters under its own brand which was an instant success and even witnessed black marketeering with consumers ready to pay a hefty premium to own one. In 2001, a year after Rajiv Bajaj, MD, started actively participating in the Bajaj company, he saw that it was losing its market leadership. However, he transformed Bajaj from a scooter manufacturer to a hi-tech motorcycle maker in a bid to tackle the huge challenge posed by the competition and to garner more market share.
In the recent years though, with the market moving towards motorcycles, Bajaj stopped production of its best selling brands like Chetak and Super in 2006 amid plummeting sales. It again entered into scooters, but tentatively, in 2007 by launching the Kristal.
Last week, the company finally announced that it would cease production of scooters altogether with the next fiscal year. It would instead focus on the motorcycle market. Showing the rift in the Hamara Bajaj-famed two wheeler giant Bajaj Auto, the group chairman, Rahul Bajaj, on Wednesday,. December 16, differed with his son and managing director, Rajiv Bajaj’s decision to exit production of scooters. Rajiv Bajaj, on the other hand, still undertook the move.
The decision to move away from scooters, according to Bajaj, is pegged on three reasons. One, the company is seeing good profitability in selling strong brands like Pulsar and Discover 100cc motorcycles. Secondly, the worldwide motorcycle market is growing faster than scooters. “There is enough headroom for growth both in the domestic and the export markets. Currently we manufacture around 50,000 units of Boxers in China, which are sold in the export market,” Bajaj explained. Boxer is sold as Platina in India.
Lastly, it would be able to address the top end with KTM motorcycles. The company has a 31.72 per cent stake in Austrian motorcycle manufacturer KTM, which manufactures motorcycles of 250cc configuration. “So, we make more money by being focused as motorcycle specialists rather than producing everything and making no money at all like the Chinese manufacturers,” Bajaj added.
He, however, hinted the company might one day come back into the scooter segment. “We have some good ideas on how to bring back the magic of a new kind of scooter. If we come back on the strength of a new category, I think we will not only have a scooter business but also a very profitable scooter business,” Rajiv Bajaj added, without giving any details.
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