Bajaj, once champ, opts out of scooters

Bajaj Auto, once India’s largest manufacturer of scooters, is exiting the business. Its last surviving scooter brand, Krystal, will halt production from March next year. 

This is one of those rarest of rare cases where a market leader with an 80% share has been forced by changing consumer preferences and an aggressive competitor to accept defeat.

Bajaj, with its ‘Hamara Bajaj’ tagline, was king in the scooter market in the 1990s. When Hero Honda arrived on the scene with its four-stroke motorcycle, Bajaj continued to bet on scooters till the former was on the verge of overtaking it. A belated shift in emphasis on bikes helped revive its marketshare, but Honda’s entry with its Activa gearless scooter in 2001 marked the beginning of the end.

Honda’s arrival was problematic even for Kinetic, which already had a gearless scooter, but in Bajaj’s case it was primarily the lack of new products that did it in. The flagship scooter brand, Chetak, was discontinued in 2005, but in 2006 Bajaj again tried to gain traction with its gearless, sub-100 cc ‘Krystal’. But this product never really brought in the desired volumes.

Bajaj Auto managing director Rajiv Bajaj said on Wednesday that he wants to focus only on bikes to eventually aim for the slot of world’s largest motorcycle maker (this honour currently belongs to Hero Honda). This is why he was stopping production of Krystal from March next year. Only about 1,000 units a month of this model are being produced, and even this is being sold only in the overseas markets.

Bajaj emphasised that the decision to stop scooter production was in keeping with the global trend where bikes accounted for more than 70% of the market. The remaining 30% was divided between scooters and mopeds. In India, scooters account for only about 12% of the total two-wheeler market.

Officials at Honda Motorcycle & Scooter India (HMSI), the largest scooter maker in India, say that their flagship model, Activa, altered market dynamics. It was launched in 2001, when Bajaj was still offering the two-stroke Chetak. “Activa remains our largest selling model even today. When Activa was launched in 2001, no other two-wheeler maker wanted to enter scooters……”.

But even HMSI has now realised that the margins will be higher in mobikes, even though it will maintain a strong presence in scooters. This is why it is gearing up for a much larger motorcycle play in the coming months, beginning with the launch of a 100 cc bike on Thursday.