Bajaj to Quit Scooter Race


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Bajaj’s withdrawal from the scooter segment won’t shatter the industry, feel the analysts. It is to be remembered that Bajaj has decided to see the way for the exit from the scooter industry, following the sale debacle with its Krystal. It is quite strange that the pioneer in the scooter with the popularity cult of Hamara Bajaj has to surrender to the situation meekly. The other makers are sitting pretty with their sale showing good prospects. Even the new entrant to the scooter sector, M&M has been showing good stint.

The figures available through SIAM adduce the fact. The sale proceeds in the period of April-November are available (the figures for the last year are in brackets) Honda Motorcycles has a good stint with the sale of 452641 units (447177 units at an increase of 1%), TVS has a selling total of 200164 units (166518 units with an increase of 20%), Hero Honda Motors with 127701 units (91957 units at an increase of 39%), Suzuki filed a remarkable growth even in less numbers 77663 units (55130 units at an increase of 41%), the new entrant M&M got the sale of 29778 units this year.
But the sad state of Bajaj with just 3356 units (7876units at a decrease of 57%) compelled the company to think over continuing in the scooter industry. Bajaj, on the otherhand, is to focus solely on motorbikes with its Discover and Pulsar producing enormous results taking the company to the second largest in India with the growth of 12.4% by selling 1085785 units. However, HMSI could muster only 1.2% in the last 8 months while retaining the 50% share in the motorcycle segment.

TVS the next largest maker, could get 23% of the market share. The reason that Bajaj is least bothered about the withdrawal of scooters is that the current trend points towards the scooters on feminine sector. It is no longer the domestic vehicle but the women’s vehicle.As Rajiv Bajaj took over Bajaj’s supremacy, he shifted the focus on the bikes especially the higher end.

This is because it has higher margin and higher value and has the prospective growth of 17-18%. The TVS CEO has somewhat different view that there is a growth for scooter segment and he informed the launch of a new 110cc Wego’. With the increased production at Manesar plant HMSI plans to concentrate on scooters and is on the verge of launching new models said its CEO.
Source: Vicky.in
 
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Its a warm welcome form my side!

I am happy for this decision by bajaj.

This will help Bajaj increasing there revnues & profits
 
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This should have come a long time back itself!! Bajaj scooters were never reliable!! We had a Bajaj Saffire for around 4 years and it was a horrid time maintaining that scooter!! Bajaj wont be affected by this, infact now they can focus more on the bikes!!
 
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dhaya, you could tell that the bajaj scooterettes were not reliable. not the scooters. because the bajaj chetak, cub, bravo etc were really good and were a big success. i still remember my dad's green colored chetak. my dad had changed 5 scooters all of bajaj. first he had a second hand cub, then a new cub, then a ivory colored chetak, a blue cub again and finally a green chetak. the green chetak was there with us till 2004 and my dad sold it(for 3k[shock] to a scrap merchant) after the dio was brought.
 
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Maybe the Chetak was reliable but we faced many problems in our Saffire not only us but almost all the owners of Saffire!! I could see Saffire's piled up in the workshops of Bajaj!! The same goes for Wave also!!
 
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yep. i agree with you. my cousin had a green saffire. and as you mentioned it spent half of its lifetime in the service center itself. one fine day he got fed up and sold it to a scrap dealer(same as my chetak) for guess how much? less than my chetak. 2k [lol]
 
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But Bajaj closing its scooter business is something like one chapter of history is closing. I still remember for bajaj's scooter people used to wait for months. Its old scooters were quite successful. But yes with time they have to change for good.
 
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Read it on the net today ... Slightly tongue-in-cheek, but I liked the way this guy writes …

In what can only be described as the end of an era, Bajaj Auto is halting production of its famous line of scooters - for five decades the preferred mode of transport for millions of Indians, who joined lengthy waiting lists and paid a premium to obtain one. Now, those same people wait in line for a Tata Nano. Even in India, the car is now king. The Nano, like the Bajaj Chetak before it, is a barometer of the nation's economic development. Whole families who once piled on to those little scooters now pile into their small affordable cars.

Sadly, something is always lost in such progress. The Chetak was based on the effortlessly stylish Italian Vespa scooter, while the Nano, though a remarkable piece of engineering, is no more than a stripped-down Toyota Yaris - the ultimate triumph of function over form.

And India, perhaps, should do more to preserve its national symbols. With the demise of the Bajaj, the days of the polyester safari suit must surely be numbered.
 
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Another extremely well written article I came across ... really thought provoking.

How marketing myopia can spell trouble for business
ARVIND SAHAY


On Wednesday, December 9, 2009, Bajaj Auto announced that it was discontinuing the production of scooters. As quoted in a newspaper, the managing director reportedly said, “one day, God willing, we will be the largest motorcycle company in the world. If we have to be a motorcycle specialist, we have to make a sacrifice in the scooter segment—where we are not selling according to expectations.”

Consider the facts. According to Siam, Bajaj’s cumulative domestic scooter sales during April to November 2009 was 3,356 units, a decline from a similar period the previous year. The Indian scooter market, currently at 1.2 million, is growing at 15%. From 12% of two wheelers in 2008, scooters are expected to contribute 20% to two-wheeler sales in 2010. The scooter market has grown at double digits in the last fiscal compared to the motorcycle market, which grew only at 2.6%. Honda Motorcycle and Scooter India has just started a third assembly line at its plant to meet growing demand for scooters.

It would appear that the venerable Bajaj brand is falling into a classic trap of marketing myopia. Almost 50 years ago, the late Ted Levitt coined the term ‘marketing myopia’ for a firm or manager’s approach and thinking that is product-focused. He suggested that the reason railroad companies in the US declined in the early- and mid-20th century was that they thought they were in the railroad business—not the transportation business; they thought that customers were buying ‘railroad’ services from them—not the benefit of being transported from point A to point B in a convenient, inexpensive way. The railroads got into trouble not because the need for passenger and freight transportation declined. That grew. However, that need was filled by others (cars, trucks, airplanes, even telephones); it was not filled by the railroads themselves.

In a similar fashion, Hollywood barely escaped being totally ravished by television. Actually, all the established film companies went through drastic reorganisations. Some simply disappeared. All of them got into trouble not because TV’s inroads hurt but because of their own myopia. As with the railroads, Hollywood defined its business incorrectly. Studios thought they were in the movie business when they were actually in the entertainment business. ‘Movies’ implied a specific, limited product. This produced a fatuous contentment which from the beginning led producers to view TV as a threat. Hollywood scorned and rejected TV when it should have welcomed it as an opportunity—an opportunity to expand the entertainment business. TV grew into a bigger business than the old narrowly defined movie business ever was. Had Hollywood been customer-oriented (providing entertainment), rather than product-oriented (making movies), it would not have gone through the financial, market and emotional purgatory that it did.

In both railroads and Hollywood, the efforts focused on improving the efficiency of making the product and on making a better product—not really on understanding what the customer was looking for and in developing and executing a good product and marketing plan. Moreover, the firms in the industry defined their products in the narrowest possible terms—just as Bajaj Auto today appears to be defining itself as being in the motorcycle business and becoming a motorcycle specialist.

It would appear that Bajaj Auto is falling into a similar trap that railroad firms and Hollywood studios fell into in the early 20th century. Mahindra & Mahindra had launched two scooter models, Rodeo and Duro, in September 2009, which are reportedly selling at more than 7,000 scooters a month. And Bajaj Auto cannot sell even 200 scooters a month? Looks like one or more of the following is true. Someone there is simply not looking at the data from the market. Or the company or at least many influential people in the company think that it is in the motorcycle business.

Let us be very clear. Bajaj Auto is ‘not’ in the motorcycle business. Bajaj Auto (and Hero Honda, TVS, HMSI, Suzuki Motors, Hyundai etc) is actually in the business of providing commuting services to office goers; it is in the business of providing a thrill and ego boost to young males; it is in the business of providing (young) family transportation; it is in the business of providing stage and contract carriage; it is in the business of providing status and transportation to college going teenagers etc. The motorcycle simply happens to be one current form of a product that satisfies some of the above enumerated needs.

As an Indian, I am enormously proud of the fact that Bajaj Auto today has morphed into an Indian company that has some of the best two wheeler technology in the world, that it has developed on its own—its DTSi engines give more than any other comparable engines and are the best in the class. It is sad to see a company that has such a business-savvy lineage making marketing decisions that leave so much money on the table for competitors. At the very least, it appears that a company that was the leader in the market across segments is now on its way to confining itself to the higher-end segments—a sure shot way of becoming a niche player or of long-term decline.

The author is a professor at IIM, Ahmedabad.
 
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