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Bajaj to spark price war in entry-level bike mart

Bajaj to spark price war in entry-level bike mart

Author | Source: The Economic Times | Monday, Dec 04,2006 9:57 AM

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Bajaj to spark price war in entry-level bike mart

Bajaj auto (BAL), which had declared its intention to raise the entry bar in the motorcycle segment from four-stroke 100 cc bikes in July 2006, is now aggressively re-stating it. Its new bikes will be priced in the same bracket as the existing 100 cc offerings. On road in Pune, the CT 100 costs Rs 36,248 and the Platina costs Rs 40,029.

Rajiv Bajaj, managing director, BAL, declined to comment on the engine specifics of these higher-than-100 cc bikes but in July, he had categorically referred to the 125 cc becoming the entry level bike for BAL.

"Price wise, these bikes, higher than 100 cc, will be priced at the same level as the 100 cc, since we have engineered them to be profitable at that level. They will definitely be based on the DTS-i technology and bikes based on our new platform will be launched in the coming few months. We accept that they will take away some of our CT 100 and Platina customers but they will take away more customers from the competition," he told ET on Friday.

Offering a bigger bike at the price of the 100 cc and retaining profitability is expected to be BAL's trump card to upgrade the market.

"We stopped production of geared and ungeared scooters and scooterettes nearly six months ago. Production of the Chetak at Akurdi was stopped in November 2005, and the Wave was last produced in April-June 2006," he added.

The path is thus being cleared for the rollout of BAL's new range of scooters, the Kristal which is coming in January and the Blade, halfway through the next fiscal.

Referring to the increase in two and three-wheeler production capacity to 3 lakh per month from April 2007, Mr Bajaj explained they currently have the capacity for 50,000 per month two wheelers at Akurdi, near Pune. The Chakan plant has the capacity to roll out 80,000 two wheelers per month, which will go up to 1 lakh while Waluj, which currently has the capacity to produce 1.2 lakh vehicles per month will go to 2.5 lakh per month.

"The Akurdi and Chakan plants together will be able to roll out 1.5 lakh units per month and the balance will be equally divided between Waluj and Pantnagar, in Uttaranchal. We will have the capacity to produce 75,000 vehicles, close to 1 million, from Pantnagar, which includes moving 50,000 from Waluj and an incremental capacity of 25,000," Mr Bajaj stated.

Scooter capacities will increase from 10,000 per month now to 15,000 per month while three-wheeler capacity will go from just under 30,000 per month now to over 35,000. This will take total BAL capacity to 3.5 lakh per month, he said. This is part of BAL's stated Rs 1,500-crore capacity expansion, spread over the next few years. Referring to the moving of bike manufacturing capacity away from Waluj, near Aurangabad, to Pantnagar, Mr Bajaj said this was always his stated plan.

"I have maintained that I want to downsize the Waluj plant and this is part of the process," he added.BAL, which has received in principle sanction to set up a special economic zone (SEZ) at its Waluj location, has not yet taken any steps to act on it.

"That approval for an SEZ is on paper and there has been no concrete action on it yet," he said. BAL already holds the land, which is currently unutilised. Shifting production away from there will free up more land but Mr Bajaj declined to comment on its future use. BAL's November 2006 sales continued to show a rising graph, with total two-wheeler sales being 2,14,329 (1,66,254) units, a rise of 29%.

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