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Old 4th April 2012, 07:22   #1
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Default Honda is No.2, pushing Bajaj to 3rd spot.

NEW DELHI: It is one of the biggest upsets in the Indian two-wheeler industry. Within just over a year of going solo in India, Japanese giant Honda has beaten 'Hamara Bajaj' with a comprehensive lead to emerge as the second-biggest two-wheeler maker, behind Hero MotoCorp (erstwhile Hero Honda) of the Munjals.


SOURCE: Honda zooms past Hamara Bajaj - The Times of India
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Old 4th April 2012, 11:16   #2
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

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NEW DELHI: It is one of the biggest upsets in the Indian two-wheeler industry. Within just over a year of going solo in India, Japanese giant Honda has beaten 'Hamara Bajaj' with a comprehensive lead to emerge as the second-biggest two-wheeler maker, behind Hero MotoCorp (erstwhile Hero Honda) of the Munjals.


SOURCE: Honda zooms past Hamara Bajaj - The Times of India
+1 with Honda preparing to launch its first high volume 110 cc bike - Yuga - in May, and Suzuki bringing its same segment 110 cc - Hayate, the largely indigenous TVS Motors may find difficult to handle the new global competition. Sales of TVS Motors, which has for the first time trailed to the fourth spot, are now largely confined to smaller engine mopeds and scooterettes, while its share is shrinking in the high margin motorbikes market.

Original Source: The Economic Times, 4/4/2012.
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Old 4th April 2012, 12:14   #3
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

Bajaj Auto's strategy is different. The management would like to avoid stepping on the toes of both Hero and Honda, because they already tried grabbing marketshare from both and failed. Now they are concentrating on their strengths - 150+ CC bikes, 3 wheelers and now venturing into 4 wheeled commercial vehicles. They are making huge strides in the export market. Infact, in FY11, 27% of their revenues came from outside India - that's Rs. 4,400 Cr!

It's Hero Motocorp that needs to be worried. Their erstwhile friend Honda has now turned foe, and snapping at its heels. Hero Motorcorp has low R&D capabilities when compared to Bajaj Auto, since they were mostly dependent on Honda for new product launches/technology.

However, I wouldn't write off Hero Motocorp either. Their brand value is still intact, going by recent quarters sales numbers. And the management knows the market very well. Overall, it would be an interesting 3-way fight between Hero, Honda and Bajaj.

Last edited by smartcat : 4th April 2012 at 12:16.
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Old 4th April 2012, 12:22   #4
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

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It's Hero Motocorp that needs to be worried. Their erstwhile friend Honda has now turned foe, and snapping at its heels. Hero Motorcorp has low R&D capabilities when compared to Bajaj Auto, since they were mostly dependent on Honda for new product launches/technology.
If Hero Motocorp is serious about the acquisition of Ducati and it works out for them, i dont think there will be a problem in the R&D division from then on.
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Old 4th April 2012, 12:31   #5
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

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Bajaj Auto's strategy is different. The management would like to avoid stepping on the toes of both Hero and Honda, because they already tried grabbing marketshare from both and failed. Now they are concentrating on their strengths - 150+ CC bikes, 3 wheelers and now venturing into 4 wheeled commercial vehicles. They are making huge strides in the export market. Infact, in FY11, 27% of their revenues came from outside India - that's Rs. 4,400 Cr!

.
+1.
Bajaj is concentrating on margins rather than volume, which is why it is pursuing it forte, the premium bikes with hardly any foot-print in the entry level and executive segments.

It has a large foothold in the overseas market. It has been exporting its entry level and midlevel bikes to S.Africa,Brazil and other countries.

Also would like to add that the operating margins of Bajaj is the highest-18-20%,while that of Hero Corp is 9-11% and other manufacturers have single digit margins,IIRC.
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Old 4th April 2012, 12:32   #6
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

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If Hero Motocorp is serious about the acquisition of Ducati and it works out for them, i dont think there will be a problem in the R&D division from then on.
Ducati can help, but only in the premium segment - just like Land Rover can help Tata make a better Aria or a Safari, rather than a Nano or a Indica. What works in favour of Hero is that they have tons of cash on their balance sheet - so they can spend money on R&D or acquire technologies from third parties.

And Hero has lots of time on their hands. Hero can still push the same models to the customers for a few more years, because customer preferences don't change that quickly. And the brand has so much pull in rural, semi-urban and urban areas.

When it was time to buy a car, my father-in-law spent 3 months researching and test drove 6 cars before settling on the Indica Vista. But when it was time to replace his old Hero Honda, he went straight into a Hero showroom and bought a Passion!
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Old 4th April 2012, 12:45   #7
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

Hero is more like Maruti in the car space, Hero knows how to re-badge, re-introduce with a mere tweek here and there and ofcourse a different sticker job. They also know how to play in the volume market just like Maruti and though competition is snapping at heir heels they still manage to be number one due to the sheer volumes in entry level.
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Old 4th April 2012, 13:11   #8
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

It is heartening to see Honda play aggressively in the 2-wheeler market. Even before the Hero-Honda split, Honda has been offering a good range of bikes and let's hope they have a healthy portfolio in the days to come.

IMO, the India 2-wheeler market will always have a very strong mix of <100cc scooterettes, sub-150cc bikes and 150+cc bikes as there is a distinct market for all three categories.

Bajaj will be at a handicap if it decides to focus purely on 150+cc bikes. And Hero will have to develop a strong line-up of it's own once it has to stop using Honda's technology.
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Old 4th April 2012, 14:18   #9
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

Whats the fuss all about?

Bajaj is the second largest motorcycle maker in the country still and third largest in the world. They chose to concentrate on motor cycles and have made huge strides in closing the gap gradually to hero moto corp.

Their share in KTM has gone up again and has reached a total of 47% stake now.

The only department that still remains is the scooters and i am sure that is going to be rectified soon.
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Old 4th April 2012, 14:34   #10
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

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Originally Posted by funkmeister View Post
NEW DELHI: It is one of the biggest upsets in the Indian two-wheeler industry. Within just over a year of going solo in India, Japanese giant Honda has beaten 'Hamara Bajaj' with a comprehensive lead to emerge as the second-biggest two-wheeler maker, behind Hero MotoCorp (erstwhile Hero Honda) of the Munjals.
This isn't the first time it has happened. A couple of years back when Bajaj withdrew it's 100cc vehicles from the market, Honda jumped to 2nd position with a small margin. That prompted Bajaj to bring back it's 100cc vehicles.
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Old 4th April 2012, 14:57   #11
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

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The only department that still remains is the scooters and i am sure that is going to be rectified soon.
IIRC, Bajaj Scooters were literally blown away at the advent of Kinetic Honda and later on by TVS and the last nail was put in by Honda with their Activa.
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Old 4th April 2012, 15:22   #12
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

Firstly these figures of Honda overtaking Bajaj is only for one month. Let us wait for subsequent months before passing any judgements.

Bajaj is making really smart moves. Infact it has literally changed the Indian two wheeler market. There was a time when 100 CC bikes we sold the most and was bread & butter segment for companies. But Bajaj shifted people's choice to 125 CC & 150 CC bikes, now-a-days it is easy to spot a 125CC & 150 CC bikes almost anywhere in country.

100 CC segment is low margin segment & Bajaj has conciously moved away from here. It has made a strong foothold in premium segment & forced the competition (Hero, Honda & TVS) to come & fight in their (Bajaj') area of strength.

Also Bajaj as very strong export market presence which is already pointed above.

I feel it is only matter of time when Bajaj will overtake Hero Motocorp as number one Two Wheeler manufacturere in India.

Thanks,
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Old 4th April 2012, 15:38   #13
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

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IIRC, Bajaj Scooters were literally blown away at the advent of Kinetic Honda and later on by TVS and the last nail was put in by Honda with their Activa.
The world knows about it.

Bajaj at that point did not have competitive scooter technology (as the phase was fast changing from 2 stroke geared scooters to 4 stroke autos) and their scooters weren't as reliable as the others.

Lets not forget the fact that Bajaj has made arguably the highest selling scooter (Chetak) in the world.

However, now they have KTM for technology. Rajeev Bajaj is an aggressive and a passionate business man. There will be no prizes for guessing that Bajaj has to re enter the scooter segment at some point and hopefully this time sustain the pressure from competition.
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Old 4th April 2012, 17:12   #14
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

It will be interesting to see how the two wheeler landscape changes between Hero, Bajaj and Honda.

Hero group which is doing well in smaller capacity bikes is struggling in premium bike sales. As per December 2011 reports they were down ~30 in premium bike sales.

This is where Bajaj scores and is doing much better then Hero in 150cc and above capacity bikes.

Honda on the other hand is a leader in gear-less scooters.

Assuming the three continue to dominate their respective areas of domination a change in market share will only mean a change in market dynamics, i.e. in this case probably scooter sales would have overshot bringing Honda to the second spot.
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Old 4th April 2012, 18:06   #15
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Default Re: Honda is No.2, pushing Bajaj to 3rd spot.

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Assuming the three continue to dominate their respective areas of domination a change in market share will only mean a change in market dynamics, i.e. in this case probably scooter sales would have overshot bringing Honda to the second spot.
Hello Mayank,

This is so far so good - Hero - Low end bikes, Bajaj - Middle & high end bikes & Honda - Gear less scooters.

But what if in future the Consumer choice changes? This is what Bajaj has done in past silently & is doing openly & loudly currrently. Hope you have seen latest Bajaj TV advertisement featuring 125 CC Bike (Husband & Wife conversation)

Bajaj has change the mindset of urban youth & shifted them first to 125 CC, 150 CC & now they have gone all the way till 220 CC. This is where Hero will struggle the most. As Hero's R & D capability are in no match with Bajaj's pro-activity to launch new models.

That is why I predict Bajaj will eventually overtake Hero as number one two wheeler manufacture in India.

But yes it will be interesting to see how Bajaj breaks into Gearless Scooter market which is dominated by Honda & Suzuki has made some inroads with Access 125 & now with Swish 125.

Thanks,
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