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According to Economic times Indias second largest two-wheeler maker Bajaj Auto is going to increase its two wheeler prices by up to Rs. 1,000 with effect from January 1, 2011. The reason is same as seen in previous price hike rising input cost.
According to S Sridhar Bajaj Auto President (Two Wheeler) The continued rising cost of raw material inputs is the main cause for this increase. Despite the hike, our models continue to offer superior value compared to competition, and hence we do not expect this price rise to affect sales,
Last week Hero Honda has announced the price hike of Rs.500 to Rs.1,500 across all the variants blaming the same reason of rising input costs. It seems like rising input cost is hurting margins of all the two wheeler manufacture but Hero Honda and Bajaj Auto are two companies which are passing entire input cost to consumer. As Bajaj Auto works on 20% EBITA margin it raises its two wheeler prices as the raw material prices increases. Hero Honda which enjoys brand equity is also started doing the same thing. This is the third or fourth price hike by Bajaj Auto in this year. The strong demand for two wheelers is giving much comfort to both of companies to raise prices twice or thrice in a year. Overall from next year January the same bike from Bajaj will cost 5-7% more from what it was costing in the January 2010.
Bajaj Auto Increases Sales Target to 4.20 Lakh Units per Month by October
Bajaj Auto have set a monthly target of selling 4.20 lakh three wheelers and bikes by October, that translates into 5mn units per annum. The company currently registers sales of 3.7 lakh units per month, from which, their Pulsar and Discover bikes account for 85,000 units and 1.35 lakh units respectively. Their Boxer bikes that is exported from their facility in China to some African markets, accounts for 40,000 of their sales, whereas the Platina and CT 100 account for about 65,000 units together.
The companys MD, Rajiv Bajaj said that a large part of their volumes will be generated through the launch of their new 150cc Boxer next month. They are also optimistic that the sales of Discover and Pulsar see an increase. Bajaj also said that their target of 5mn units per annum marks a great turnaround for their company that had set a target of just 2.2mn in the fiscal year 2008-09. He added that they had wrapped up the FY10 with sales of 2.8mn units, which increased to around 3.8mn units in the fiscal year 2010-11. They have managed all this, while keeping their EBITDA margin above 20% that is a testimony of their successful brand strategy. According to the company, their Discover bike played a vital role in their growth story. Their Discovers 100cc variant launched two years back, made headway in a segment that was then ruled by Hero Honda. Bajaj said that their strategy was to develop the best possible bike to go against the 100 that resulted in the 150. This contrast in the commuter bike category was quite successful, with many buyers opting for power over mileage with the Discover 150. This was followed by the launch of Discover 125 in April that has already gone on to become the highest seller in its segment. Of the cumulative sales of their Discover series, the 100cc bike accounts for 50%, with the remaining accounted by the 150 and 125. As commuters are changing their preference from 100cc bikes, the company needs to develop a greater presence in the commuter bike category in relation to Hero Honda.
Bajaj added that likewise their Pulsar bike was doing great in the segment of sports bikes, with monthly sales of more than 80,000 units. They are also going to launch an upgraded variant by September that is expected to maintain the bikes sales momentum. They are also betting a lot on their Boxer 150 that was launched without much fan fare in Uttar Pradesh and Maharashtra. The Boxer, labeled by the company as Bharat bike is a more performance based bike that is strong on all factors like chassis, headlamp, seat, tyres, suspension and engine. Bajaj said that this bike is like tank on wheels, and will develop a new segment with its launch. According to the company, prospective buyers of the Boxer opt for power over discounts, because of the tricky conditions they have to operate in. In regards to that, a 150cc motorcycle priced at INR 40,000 makes for an attractive opportunity in this category.