Executive director Sanjiv Bajaj, who looks after the company's exports, plans to double his share in the global market in three years. Excerpts from an interview with Kausik Datta.
Bajaj Auto crossed the one lakh export mark three years ago. What's the progress since?
We exported 4.4 lakh two- and three-wheelers last year - it was 2.5 lakh in 2005-06. We will end this year with an export of 6 lakh vehicles, a number that's 20 per cent of this year's sales. Right from the early 1990s, our chairman has been saying exports should comprise a fourth of our sales - it was less than five per cent four years ago.
What is your target now?
It's a moving one since we are growing our share in an expanding market.
Even so.
The numerical target is to export 1 million vehicles in three years (by 2010). More importantly, our desire is to build the Bajaj brand in some growing overseas markets. The third target is to grab and retain the leadership position.
Which are the markets you are in?
We've entered three important markets in the last three years. Indonesia is the largest market we've got into. It is a 5 million vehicles market, the third market after China and the US. Nigeria is another important market for us, but is different from Indonesia. The third market we got into, with a partner, is Iran - that's a 0.5 million market. Plus, we are in Sri Lanka, Bangladesh and Columbia where we are number one, and we are number two in Central American markets such as Guatemala, El Salvador, Panama and Costa Rica. We have also seen significant improvement in Egypt, a very big market for three-wheelers. Many developing markets are ideal for three-wheelers. We sell three-wheelers in Sri Lanka, Bangladesh, and African countries such as Sudan, Ethiopia, Kenya, Nigeria, Egypt and Mexico.
What is the marketing strategy?
It differs. We have started selling high-end products like the Pulsar in Indonesia where the Japanese control over 90 per cent of the market. The Nigerian market is completely Chinese, dominated by very cheap and poor quality products. Seventy per cent of motor cycles are used as taxis in Nigeria where people want a strong motor cycle with a long seat. So, we launched the Boxer S - a new avataar of the Boxer we used to sell in India. We launched the product in July 2006 and it now sells 5,000 a month. The selling point in Nigeria is the Bajaj brand which offers high quality, high reliability and high fuel efficiency. In Indonesia, the Bajaj brand reflects high performance and high price.
What is the branding strategy?
We sell under the Bajaj brand. The only exception is Kawasaki with whom we enjoy a long-standing relationship - in some markets like the Philippines, Kawasaki sells our products under our brand. They also sell our motor cycles in some Latin American markets as Kawasaki. Where they think they can charge a higher price, they put their brand on the product.
What happened to the Pakistan export plans?
The Pakistan government is not keen to get motor cycles from India.
Once you export a million vehicles, how does your global position change?
We are the fourth largest two-wheeler maker after Honda, Yamaha and Suzuki in the global market of 40 million units. The global market is growing at 3-4 per cent a year, compared to our growth of 15-20 per cent (exports are growing even faster). At this rate, our global market share should double in three years. We are very close to Suzuki now. I think a few Chinese players may enter in the top-five bracket.
Do you run exports out of India?
Three years ago, our entire team was in India. But this didn't work since many markets are in different time zones.So, we set up an office in Mexico to serve south and central America; the Indonesia office looks after Indonesia and the Philippines; the Dubai office takes care of Africa and the Middle East; and we've put our teams in a few significant countries like Bangladesh, Sri Lanka, Egypt and Nigeria.
How do you tackle fakes?
Our products and brands are registered, so by law, no one can copy them. But if there's a copy, we take legal action. We saw copies of the Pulsar in Sri Lanka, for instance, and went to the court and got an order against the Sri Lankan importer who was importing the products from a Chinese player. Sri Lanka is the only place where we sought legal recourse - we saw a few copies of the Pulsar in Iran. We'll take legal recourse if we see its growing.
Will you buy foreign brands to grow overseas?
The combined market share of Honda, Yamaha and Suzuki is nearly 90 per cent in most of the places we want to be, so there is no one left to target. Also, what do we get by acquisition? We don't need any one's product. We might look at a company which has a good distribution network. We are now creating the network.
What about acquiring big brands like Triumph and Ducati?
Our export strategy is based on our product range only. You can not buy Ducati and put out 120cc bikes. Those brands are not relevant to our existing growth model.
But they are big premium brands...
The brand building exercise in these markets is very expensive. Typically, markets in the developing countries are for bikes up to 250cc. The moment you go to 600cc and above, the markets are the US, western Europe and Japan. These markets contribute only a tenth of the overall market of 40 million vehicles. But the margins are significantly higher in the premium segment, so you do make bigger bikes at some point in time.
Weren't you in talks with Ducati and Triumph?
We are always talking to people. There is nothing beyond that.
How do you justify producing a small car?
Honda started with bikes. Now it makes cars and even planes. BMW make bikes and cars. Toyota makes cars and small planes - it also owns 20 per cent in Yamaha, which makes bikes. So, there is nothing surprising in our strategy to get into small cars. We are a company that makes products for transportation. We produce three-wheelers as well. Therefore, getting into small cars is a logical extension of our business. But it is something under evaluation right now.
So will you also make planes?
We want to have our feet firmly on the ground!
What is the status with your proposed tie-up with Renault for the small car?
Talks are on between their teams and our teams.
Will you exhibit the product in the auto show in New Delhi in January?
I can't confirm it.
There are talks that you will make engines and Renault will make the body
We hope to arrive at a conclusion in next three months.
But you took over 250 acres in Chakan (in Maharashtra) last week for the four wheeler project.
That is different. That is for our four-wheeler cargo carrier project.