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Automania

Article Summary   by:vas    
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Top Throttle in Bikes.

India is one of the most successful and growing stories in automobile business in all segments. With the sumptuous sales breaking overshooting every month especially by top three players and even niche players like LML, Majestic Auto and Kinetic enjoying good run in the two wheelers, the segment is attracting attention from global players like Suzuki and Yamaha and regional players like Salim group of Indonesia. Two wheelers is a high volume and extremely competitive segment in Indian auto industry. The margin squeeze is thanks to lower prices that in turn are driven out by intense competition on the one hand and rising input costs on the other hand. Gradually the two-wheeler makers will realise that cutthroat marketing is hurting bottom line severely. There are better ways to get volumes –new models and better-cost consciousness.With the spiffiest growth in the bike business and a bulge bracket kitty of Rs. 5500 crores in surplus funds, Bajaj Auto has been one of the most exciting case –studies in automobiles. For decades it was the name synonymous with scooters in India. When stiff competition from bikes, especially Hero –Honda, bled its scooter division than it did a remarkable turnaround by re launching improved bikes to take competition head on and also giving a makeover to its scooter division to emerge a winner in the process.
Recently Bajaj Auto has extended its technical tie up with Kawasaki into a full-blown joint venture to manage distribution network in foreign lands. The venture has been floated on the stipulation that Kawasaki makes big vehicles and Bajaj focuses on small vehicles, so the two giants compliment each other completely. In some countries the two may jointly take equity in the distribution network.Bajaj has formulated plans on drawing board for getting into low cost truck business. It may buy technology from places like Italy and use its own expertise in low cost carriers along with leveraging its strong vendor base for distribution channel management. The chairman of the company Rahul Bajaj is of the view that the only reason for rampant discounts in the Indian two wheeler segment is the need to shore up volumes. At the end of the day it really does not pay up, instead it ends up hurting margins. But if push comes to shove, than Bajaj can match any body rupee fro rupee because no one has a war chest bigger than Bajaj.
Published: December 02, 2005   
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