Bajaj Auto Ltd.: Overtaken in the Indian Scooter Market

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Case Details:

Case Code : BSTR216
Case Length : 20
Pages Period : 1999-2006
Organization : Bajaj Auto Ltd.
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : Auto and Ancillaries

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Consequently, by the early 2000s, motorcycle sales surpassed that of scooters and BAL lost its title of India's largest two-wheeler company to Hero Honda⁶. Scooters were BAL's main products, and when market preferences shifted to motorcycles, the company was faced with declining sales and revenues.

In an attempt to recapture market share, BAL decided to reorient its business, launching a series of new motorcycle models, which halted the downward trend in sales. It did not want to give up on scooters either. It launched new scooter models and upgraded existing ones.

However, with the introduction and subsequent popularity of Honda Motorcycle and Scooter India (HMSI)⁷ scooters, especially the Activa, a gearless⁸ scooter, BAL lost its dominance over the Indian scooter market as well.

In 2005-06, scooter sales in the Indian market were around one million units annually, and consisted predominantly of gearless scooters. In 2005-06, scooter sales in the Indian market were around one million units annually, and consisted predominantly of gearless scooters.

Even as it phased out the Bajaj Chetak, BAL was making efforts to regain market share in the scooter market. In early 2006, BAL announced that it would launch two new models of gearless scooters in 2006-07. However, with new scooter launches from Hero Honda and Kinetic Motor Company Ltd.⁹, analysts felt that it would be an uphill task for BAL to once again become the largest scooter manufacturer in India.

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6] Hero Honda is the joint venture between Honda Motor Co. Ltd. and Hero Cycles Ltd. It was established in 1984. In 2002, with its motorcycle sales touching 1.4 million units, it became the world's largest two-wheeler manufacturer.

7] Honda Motorcycle and Scooter India Pvt. Ltd. was incorporated in 1999 as a fully-owned subsidiary of Honda Motor Co. Ltd., the auto major of Japan.

8] Gearless/ungeared scooters are scooters with automatic gear transmission. They usually come with convenient features like self-start, auto choke, etc.

9] Kinetic Motor Company Ltd. is part of Kinetic Engineering Ltd. (KEL), the flagship company of the Kinetic Group. KEL was incorporated in 1970 to manufacture two-wheelers. In 1972, the company launched its first moped, Kinetic Luna.

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