Bajaj Auto, unveiled a new engine platform, digital twin spark -swirl induction, hoping it'd solve its twin problems of falling volumes and shrinking margins.
PUNE: Bajaj Auto on Thursday unveiled a new engine platform — digital twin spark - swirl induction (DTS-Si) — with the hope that motorcycles based on it would help address its twin problems of falling volumes and shrinking margins.
The company plans to roll out the first 125cc motorcycle based on the new platform, christened Exceed, across the nation on September 9. Though the company didn’t disclose the price, indications are it would sport a tag in the vicinity of Rs 40,000, ex-showroom.
The company hopes to sell 50,000 units of Exceed a month by October-November.
The motorcycles would initially be rolled out from the company’s Aurangabad facility, and by December-January, its Pantnagar factory would also begin producing them for the northern market.
The company claims that the new engine, for which it has sought a patent, marries the performance of a 125 cc bike with the fuel efficiency of a 100 cc one.
Managing director Rajiv Bajaj said, “Our view is, the volume fall in the 100 cc segment has less to do with interest rate and liquidity and more with lack of product excitement. We believe that this new engine technology, for which we were working on for over three years, would shift 100 cc customers to superior 125 cc bikes.”
The 100 cc segment has shrunk to 61% of the overall motorcycle market in July, from 73% a year ago. This segment, where Bajaj has a 27% market share, has degrown by 21% during the April-July period. In contrast, the segment from 125cc to 150cc and above has grown by 16%. Bajaj has a 50% marketshare in the 100 cc segment.
Bajaj said the company was making little or no money in the entry level 100cc bikes and would not be too perturbed with a loss of markstshare in that segment in favour of the 125cc and above bikes, where operating margins are in the 15-20% range.
Bajaj has a relatively small presence in the executive segment - 110cc to 125cc - bikes and Exceed is expected to address that lacunae. However Exceed is expected to eat into the marketshare of the existing Bajaj products, too.
“The segment is about 200,000 a month, of which we sell only about 5,000,” said S Sridhar, chief executive, two wheelers. We expect cannibalisation of about 25,000-30,000 (of the expected 50,000) units. We are not so sensitive to the loss of Platina (Bajaj’s existing premium 100 cc bike) in favour of Exceed since Exceed would bring us better margins,” he added.
At a net level, the company is expected to make about Rs 4,000 in additional operating profit on each Platina customer shifting to Exceed.
The company doesn’t plan to export Exceed this fiscal and will instead focus on the domestic market.
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