BAJAJ AUTO LTD

presented byvamsi

BharanidharAmitAmar

NishanthBharat

BibhashSneha

MalikarjunRajsekhar

Yogesh

BAJAJ AUTO LTD

In 1945, Kamalnayan Bajaj, Jamnalal's son, set up Bachraj Trading Corporation Ltd.

In 1960, BTCL was renamed Bajaj Auto Ltd. (BAL) and the company went public.

In the early 1960s, BAL, in collaboration with Piaggio, started manufacturing Vespa brand scooters at its plant near Pune, Maharashtra.

Rahul Bajaj became the group's chief executive officer in 1968 after first picking up an MBA at Harvard.

By 1970, the company had produced 100,000 vehicles.

The technical collaboration agreement with Piaggio of Italy expired in1977

Piaggio, maker of the Vespa brand of scooters, filed patent infringement suits to block Bajaj scooter sales in the United States, United Kingdom, West Germany, and Hong Kong.

Japanese and Italian scooter companies began entering the Indian market in the early 1980s.

The Bajaj M-50 debuted in 1981,

In 1987 his attempt to buy control of Ahsok Leyland failed.

Bajaj Auto produced one million vehicles in the 1994-95 fiscal year.

The company was the world's fourth largest manufacturer of two-wheelers,behind Japan's Honda, Suzuki, and Kawasaki.

Bajaj Auto had quadrupled its product design staff to 500.

It also acquired technology from its foreign partners, such as Kawasaki(motorcycles), Kubota (diesel engines), and Cagiva (scooters).

'Honda's annual spend on R & D is more than my turnover‘.

In late 1999, Rahul Bajaj made a bid to acquire ten percent of Piaggiofor $65 million

Employment fell from about 23,000 in 1995-96 (the year Bajaj suffereda two-month strike at its Waluj factory) to 17,000 in 1999-2000.

BAL IN 1993 PRODUCTS: It manufactured 12 different models 2-wheeler products lifetime lies between 10

o 15 years 90% of 3- wheelers were used as low-cost

passenger taxis 10% used as light commercial vehicles Average life time of 3-wheeler products was

10 yrs

MANUFACTURING: It is capable of producing at a rate of over 3,000 vehicles a day in two

AKURDI plant employs 5,800 workers and manufactured 4 scooter models,M-80 motorcycle auto rickshaw

WALUJ plant employs 4,800 workers and manufactured 3 scooter models,KB-100,4Smotocycles,rear engine auto rickshaw and sunny moped

KAMATH-BAL. general manager explained his motto OURGOAL IS CONTINOUS IMPROVEMENT

AKURDI plant slogans ZERO DEFECTS AND THINK QUALITY

• TARGETING:• Scooters targeted the FAMILY MAN aged

between 27 and 38 years• Motor-cycles targeted young single man aged

between 21 and 30• Mopeds were the cheapest two wheelers

available.• BAJAJ SUNNY targeted to teenagers and women • In 1993 consumers ought to buy low

maintenance needs and a long time at a low cost

• Dealers believed that additional key success factor for 2-wheeler manufacturer was SERVICE research

COMPETITORS BAL was the only competitor It manufactured with a full range of

collaboration with KAWASKI Major competitors are

HONDA,YAMAHA,SUZUKI,PIAGGIO Japan products are marketed since 1984 They were perceived by indian consumers

as Higher tech, more modern and better finished than domestic products

Reputation for Less fuel efficiency, costly to purchase and limited spare parts

HONDA:BAL important competitor in 1993 It has a technical advantage features like

electric starter and modern automatic drive 1985-launched 4 stroke motor cycle resulted

in fuel economics for the consumer 1992-market leader in motor cycle 1993-ranks 1 in Indian 2 wheeler market It launched a new stream of Products in the

50-150cc category 1993-It was sold through 218 exclusive

dealers Kinetic honda through 390 It increased its number of dealers and

provide them with avg. margin of 4.5%

YAMAHA: Technical licensing with ESCORTS

Captured 15% of motorcycle market Product line distributed through 490

exclusive Escort dealers Yamaha had a good market in Indian

market but Escort losses market share and profits

Yamaha and Escort likely to form a Equity based joint venture

Where Escort had a sufficient financial resources

SUZUKI: Joint venture with TVS group 8% of Motorcycle market Products distributed through 337

exclusive dealers Suzuki had a appropriate scooter market It recently acquired a controlling interest

in 4 wheeler market 1993-Tvs-suzuki there held no profit Where Tvs had a financial resources

PIAGGIO: LML manufactured scooters with PIAGGIO

They were similar to BAL product Held 11% share of the scooter market 1992-Weak market

BAL MARKETING STRATEGY For MANY years DEMAND overcome

PRODUCT It enjoyed a protected seller market 1980-faced a competition 1993-Increased annual sales to 1 million

units Achieved share leadership- In 2 wheeler sub categories As well as 3 wheeler segment

PRODUCT DEVELOPMENTIN 1993,BAL’s

STRATEGY

i. PROVIDING CONSUMERS WANTS

ii. IMPROVING EXISTING PRODUCTS

iii.INTRODUCING NEW PRODUCT

STRENGTHS

 Higher labour productivity and greater automation  Wide spread distribution network Technical expertise collaboration with Kawasaki

Japan World’s low cost manufacture 2-3 wheelers Implemented new technology using CAD/CAM and

CNC machines High economics of scale Extensive service & availability of spare parts Good brand name

WEAKNESSES

Lacks design capability and ability to translate new products

Average product time for new models 4-5years

Lack of sufficient skill personal in R&D Low response of suppliers Huge competition from local and foreign

players Financial support

OPPORTUNITIES

Launching of new products and variants of existing models backed up by appropriate marketing efforts. 

Fuel efficiency which is much higher than competitors 

Virtual zero maintenance among the products

DISTRIBUTION & SERVICE

Effective distribution of its products to 330 exclusives dealers across the country.

The distribution system was computerized with 30% of dealers connected by modem link.

In 90’s an additional parts distributers channel was opened.

Spare parts were easily available anywhere at reasonable prices.

About 40% of all 2-wheelers spare parts sold in india were made by BAL

THREATS

Hero Honda's switch start automatic transmission 100cc scooter 

Competition from MNC's  Government regulations Dealers not adjusted with changing

realities  Change in tastes of consumers

DEALER NETWORK

In 1993,BAL has developed a network of 330 dealerships in India, and 8oo licensed service center.

Dealers maintained service centers and spare parts inventories.

BAL began to set up regional depots, for management of profitability and to reduce transit time.

In 1994, BAL planned to expand its dealer network to 370, particularly in rural areas

CONSUMER FINANCING

India govt. did not encourage bank loans for 2-wheelers purchase.

In 1988 ,BAL established Bajaj Auto Finance Ltd.(BAFL) to provide consumer finance.

In 1992,BAFL had financed over 100,000 vehicles.

In 1993,160 of the 330 dealers operated BAFL consumer finance schemes

ADVERTISING & PROMOTION

MEDIA 2-wheelers

3- wheelers

BALcorporate

BAFL

Dealer coop

TOTAL

T.V 44.5 0

2.5 1 2 50

PRESS 34.5 2 2.5 3 7

49

RADIO 1 0 0.0 1 1 3

MAGAZINE

5 0 1.0 1 1 8

TOTAL 85 2 6.0 6 11

110

PRICING STRATEGIES In the past, BAL pricing strategy was

adequate return for dealer and 15% margin for manufacturer’s.

In 1993,strategy was lower the input to gain the penetration in the market place.

In every market segmentation, they adopt different pricing strategy in different models to cater the different market segment.

WORLD MARKET

IN 1992,BAL held a world market share of 40% which include 2 & 3-wheelers.

BAL’s exports where mainly in neighboring countries.

BAL’s major export markets for 3-wheelers is of 4,500BAL units.

DEVELOPED COUNTRIES

In the US the 50cc market was dominated by japanese market

In EUROPE the 50cc market was also the largest segment

In these countries product performance requirements were exciting

The market for 3 wheelers in these countries were virtually non exixtent.

DEVELOPING COUNTRIES

In south east Asia imports of two wheelers were restricted

China was the largest market in the world Japanese had set up plants in China Major problems with African countries

was the difficulty to access to foreign exchange

Latin America was an attractive market for 2 wheeler market

STRATEGIC OPINION GROWTH

BAL executives were considered three options for international markets-

It should focus on domestic market and export only to opportunistic basis

It should purse export in developing countries

Promote exports in developing countries; initially focusing on the lower end MOPED market in EUROPE

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