Why Bajaj NEEDS to tackle the Mid Market Differently

I was SOOO glad to hear that Bajaj was planning to launch a 400cc version of the Avenger or a CS400 by Mid 2016. But it sounded more like a knee-jerk reaction to a market development where they were caught with their pants down. It was a launch that should have happened at least a year back.  It seemed like they were trying to stop the fence-sitters  from going ahead and booking a Royal Enfield Himalayan

To put this view into perspective, lets put some data in terms of volumes. Royal Enfield sold more than a Lakh motorcycles in 2014, and Volumes have doubled in 2015. All the models that Royal Enfield sells are more than Rs.1 lakh on-road. In-comparison, Bajaj has sold 21,000 Dukes in India in Fy15. Dukes are the Only models that Bajaj sells/manufactures that cost more than one Lakh.

So it's easy to see that Royal Enfield is the real king of premium motorcycles in India. Something that Rajiv Bajaj expressly wants to become, because that is where the margins are. But Bajaj did nothing to actually bolster that image till recently launching Avenger Street and Cruise 150.

Why is it that RE is able to sell more expensive motorcycles than Bajaj even though Bajaj is the one with deeper pockets, bigger marketing and R&D budgets, and better ability to sell motorcycles through the length and breath of the county.

I think the lacuna in Bajaj's strategy is (was?) its total dependence on Sport-oriented motorcycles in the premium category (read Pulsars, Duke and RCs). May be it failed to realise that teenagers don't make money.. and are dependent on parents for their spending power. The 25-30 year olds with their own income and big borrowing power, quickly grow out of going faster and are looking for a comfortable two-wheeler for themselves and probably their wives as pillion. I see so many office-goers preferring the Activa as a two-wheeler, after buying a car, even though they have the money. Someone with a greater inclination for adventure might even choose a motorcycle provided that its comfortable for the rider and the pillion. Right now, there isn't a single product from Bajaj that actually fits the bill. If you are a 30 year old executive who wants a comfortable motorcycle for two people there simply aren't any options in the 1-2.5Lakh bracket other than the Royal Enfields.

Another BIG lacuna that I find the Bajaj scheme of things is the Experience. RE is all about riding clubs, touring, brotherhood, jackets, apparel, accessories. Bajaj started well with the KTM branded showrooms but lost it along the way. It make too much cash from motorcycles (4000Cr EBITDA) to concentrate on smaller things like apparel and rider gear. But these accessories provides more opportunities for the target audience to interact with the brand and look at new products. Pulsar brand is diluted now, since the Japanese got into the sporty 150s segment with the Gixxers, R15s and FZs. 200NS was a marketing failure. Bajaj could have easily priced it 10k higher than the P220 and that money should have been used to provide it with better quality components. You hear complaints from user saying that the tyres are not grippy enough, the wheels breaking on impact and the paint on the engine chips off easily. Bajaj cannot keep the Pulsar brand in the 'cheap motorcycle' category, if the same brand has to compete with Gixxer and FZs of the world. Or it has to invest in a new brand and a new dealership network.

Coming to the dealers, I am not sure if being a Bajaj dealer is profitable enough today. The two dealers whom I brought my motorcycles from, closed within 3 years of me buying the bike. Compared to that Hero dealer in the area who is almost a land mark now and the Honda dealer we bought the Activa from in 2009 is still going strong.

Given that the volume growth for Bajaj is flat to negative, I think many urban motorcyclists have moved beyond the Pulsar 150 they owned once, but Bajaj hasn't been able to do the same. There isn't a viable upgrade for them in the Bajaj stable. Nothing premium. Maybe its time for Bajaj to think of opening up new segments like the V15 and the Street 150. Maybe a Maxi scooter with 200cc Engine?