 "Bajaj Auto tweaks go-to-market strategy")
Bajaj Auto is back on the radar of investors, as it has reworked its market strategy. It has outlined a strategy to plug the gaps in its portfolio and focus on untapped opportunities to improve share in the domestic market, as it has clearly not been able to dent rivals in the executive segment (125-150cc).
To address demand in the two-wheeler space, Bajaj has broken the market into six segments. It has broken the premium and executive segments further, on the basis of price points. Since gaining market share in the executive segment, defined as M2 and M3, is difficult, Bajaj is choosing to focus on the M1 or economy segment.
Despite launching Discover 100cc and 125cc, Bajaj's market share in the executive segment is in a low single digit. The company has 44 per cent in S1 but accounts for 14 per cent of the domestic market. According to Kotak Institutional Equities, the company has admitted the Discover has not lived up to expectations and the key reason for the failure of both was confused positioning. The company is hoping new products would help reclaim market share. The launch of Platina early next year is set to be positioned above the basic Platina model and the company hopes to eat into the market share of Dream Neo and Splendor. HDFC Securities says Bajaj Auto expects its market share to improve from 18 per cent in FY15 year-to-date to 24 per cent, translating into average monthly volumes of 217,500 units. By relaunching the Discover either in the M1 or M3 segment, Bajaj hopes to improve the Discover market share from 10 per cent to 12 per cent.
In S2, the company plans to launch two variants of the Pulsar. The company also intends to continue to focus on export markets. Bajaj has identified 28 new markets and plans to enter 13 new ones for two-wheelers and 14 new ones for three-wheelers. Motilal Oswal Securities has a ‘buy’ rating on the stock as the stock trades at 16.3x/14.1x FY16/FY17 earnings, which is in line with historical average.
To address demand in the two-wheeler space, Bajaj has broken the market into six segments. It has broken the premium and executive segments further, on the basis of price points. Since gaining market share in the executive segment, defined as M2 and M3, is difficult, Bajaj is choosing to focus on the M1 or economy segment.
Despite launching Discover 100cc and 125cc, Bajaj's market share in the executive segment is in a low single digit. The company has 44 per cent in S1 but accounts for 14 per cent of the domestic market. According to Kotak Institutional Equities, the company has admitted the Discover has not lived up to expectations and the key reason for the failure of both was confused positioning. The company is hoping new products would help reclaim market share. The launch of Platina early next year is set to be positioned above the basic Platina model and the company hopes to eat into the market share of Dream Neo and Splendor. HDFC Securities says Bajaj Auto expects its market share to improve from 18 per cent in FY15 year-to-date to 24 per cent, translating into average monthly volumes of 217,500 units. By relaunching the Discover either in the M1 or M3 segment, Bajaj hopes to improve the Discover market share from 10 per cent to 12 per cent.
In S2, the company plans to launch two variants of the Pulsar. The company also intends to continue to focus on export markets. Bajaj has identified 28 new markets and plans to enter 13 new ones for two-wheelers and 14 new ones for three-wheelers. Motilal Oswal Securities has a ‘buy’ rating on the stock as the stock trades at 16.3x/14.1x FY16/FY17 earnings, which is in line with historical average.