Production of the 125 cc motorcycle has started in an assembly plant in China, putting the country's second-largest maker a step ahead of competitor Hero Honda, which is also working on a motorcycle reportedly between the Rs 17,000 and Rs 20,000 price point.
"We have started the production of a 125cc motorcycle which is branded 'Boxer' and not Bajaj in China. This motorcycle will also make its way to India later," said Rajiv Bajaj, managing director, Bajaj Auto. He declined to reveal the date of the launch.
Bajaj Auto is not lending its own brand name for the low-cost offering because it does not want to dilute its brand image. The company is progressing to higher capacity motorcycles.
"Boxer" is the the name of a motorcycle brand that Bajaj discontinued in 2004.
Bajaj's Chinese assembly plant will be ramped up to manufacture around 20,000 Boxers a year. About 14,000 of these will be exported to Nigeria, a 1.6 million a year low-cost motorcycle market.
Bajaj is targeting a share of at least 40 per cent or 5.5 million units of the global market for low-cost motorcycles.
The lowest priced motorcycle available in India today is the Rock100, a 100cc offering made by a Kolkata-based IT company called Xenitis along with Guangzhou Motors of China, which is sold for Rs 25,000.
Bajaj and Hero Honda sell motorcycles that start from over Rs 33,000. Bajaj's entry-level 100 cc motorcycle Platina is priced at Rs 35,000 and Hero Honda's cheapest model, the CD-Dawn, is priced at Rs 33,490 (both prices are ex-showroom, Mumbai)
The move towards low-cost motorcycles by India's largest two-wheeler producers is perceived as a step towards addressing the first-time-buyer and defending the market against competition from Tata Motors' cheap small car, the Nano.
The primary target for such a motorcycle for both Hero Honda and Bajaj Auto will be the rural market, where the bicycle remains the main personal mode of transport. About 15 million bicycles are sold in India every year.