You can trust Rajiv Bajaj, MD of Bajaj Auto, to make statements that raise eyebrows. Latest in a series of such statement came at the company’s recently concluded Annual General Meeting (AGM).
Defending his strategy to stay away from fast growing scooter segment, Mr. Bajaj said that even for a big company like Bajaj, being profitable in every segment of the two wheeler market is not possible.
He pointed out the example of Royal Enfield to Bajaj’s stakeholders, highlighting the fact that the Eicher owned bike maker is present only in one segment and yet take home an EBITDA margin of 29%. Mr. Bajaj stated that if his stakeholders can convince Eicher MD and CEO Siddhartha Lal to make scooters, then he would approve a Bajaj scooter project.
He also pointed out how Bajaj’s rival Hero Motocorp excels in commuter motorcycle segment (which is bigger than scooter segment in terms of monthly sales) but is not making a mark in scooter segment. Yet another example he shared was of TVS which has a significant presence in scooter space but misses out on middle motorcycle segment.
His decisive statement puts an end to the rumor that suggested the existence of a Bajaj scooter project. The company will continue to increase its market share in the 100-400 cc motorcycle segment despite the scooter segment looking poised for further growth. The premium space above 400 cc will be taken care of by KTM and Husqvarna brands that are partly owned by Bajaj.
Bajaj’s decision to opt out of scooter segment despite having a rich scooter heritage with the Chetak and Super nameplates may sound counter intuitive to many but others would share Rajiv Bajaj’s point of view. To give you a perspective, the scooter segment registered a slower growth than the motorcycle segment for the first time in a long while during the first four months of this financial year.