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Wednesday, July 28, 2010

Killing history for the future

“Buland bharat ki buland tasveer - Hamara Bajaj!” The campaign from the Bajaj stable had become synonymous with the Indian middle class of the 1980s and early 1990s. So the decision of Rajiv Bajaj to stop production of scooters is bound to invoke feelings of nostalgia. Indians will fondly remember even the not so good ol’ days when they had to wait for months; and in some cases, years, to get hold of their Bajaj scooters; unless they had contacts or... well... spare dollars to give for booking. And then the inevitable happened – motorbikes came to India and because of liberalisation, middle class Indian saw a rise in income. The company saw its sales fall down to a few hundreds in 90’s. For years, Rajiv Bajaj tried to sustain his scooter business, but it was expected that the end of scooters was coming. But that’s not the logic that Rajiv Bajaj has been giving. Speaking on the occasion of the launch of the Pulsar 135 LS, Rajiv Bajaj said that the company wanted to become a “motorcycle specialist” and would not be able to make scooters anymore. “The scooters did not sell as per our expectations... now our focus is on motorcycles,’’ he said. However, bridging the gap with Hero Honda won’t be easy. While Honda makes 7 million units per year, Bajaj makes only 2 million. Besides, the shift from the entry level to the premium segment in motorcycles has not worked out according to Rajiv’s expectations. Therefore, one really wonders whether allowing scooters to die a natural death will be of much help, especially given the recent rise in the fortunes of India’s scooter segment. Check this: the segment that had been dipping by 10% only three years ago is now growing at almost 15% per annum. Guess Mr. Bajaj needs a reality check on more ways to grow “Hamara Bajaj.”

Niharika Patra

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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