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Bajaj Auto's gamble with a higher-end model under the Discover brand seems to have paid off. It launched the stylish 150-cc version nearly four months ago and it has become a runaway success for the Pune-based company, with customers lining up for an upgrade.
Discover contributes more than half of Bajaj's sales and less than a year ago, the brand was in trouble. Posting stellar sales for a couple of years, its slide affected Bajaj's market share as well.
After being discontinued since its first launch in 2004 (as a 125-cc bike), Discover was relaunched in 2009 as a 'Hero Splendor-killer' (referring to Hero Motocorp's bestseller). Bajaj positioned the brand as a fuel-efficient model by launching the Discover 100, essentially a commuter bike. But analysts rang the alarm bells when the company overenthusiastically launched a flurry of versions from 100-cc, 110-cc, 125-cc to 135-cc bikes, confusing the customer on what Discover stood for.
The Discover 150-cc was launched to take the brand out of the mire it was in. Deliberately priced aggressively, despite being packed with features, analysts said that bike was repositioning Discover as a commuter bike for the premium rider.
The Discover 150 is the cheapest motorcycle in its class, with competition from five other bike-makers that share more than a dozen models between them.
Bajaj Pulsar 150 occupies one-third of the market, while Honda Unicorn and Yamaha FZ control another third of the 800,000-1-million-units market.
Introduced in three variants, Bajaj claims to have sold 70,000 units of the Discover 150 in three months, making it one of the best-selling bikes in its class. The model now accounts for a third of Discover's sales every month across eight variants. Discover 150 has even trumped the Pulsar 135, the smallest in the Pulsar line.
Experts credit the bike's pricing for its run-rate. At Rs 51,720 the Discover 150 is priced only a little higher than India's best-selling bike, Hero Splendor. One of the better-selling 100-cc Splendor models sells for Rs 48,000, with less specifications in a category a few notches lower than the Discover 150. In addition to higher power, the Bajaj bike has tubeless tyres, digital metre and nitrox suspension. Its design, too, is sportier.
On-road mileage of 60-kms a litre of the Discover 150, as claimed by Bajaj, is comparable to the mileage returned by most 100-125-cc bikes.
The half-fairing version is the top-end model costing around Rs 59,000, a style detail that is absent in most commuter bikes, including in the 150-cc space. Eric Vaz, president (motorcycles), Bajaj Auto says, "We did not expect the half-fairing version to have such a demand. We were struggling to meet its demand in the initial weeks. In the 150-cc class there is no other bike which comes with fairing. More than 50 per cent of the bike's sales comes from the half-fairing version. We hit a high of 30,000 units and volumes could stabilise at around 25,000 units per."
But Bajaj needs to keep the bike's momentum going, as in the past it has had to phase out series of models, including one-time best sellers.
For instance, The Discover 100, which used to clock more than 70,000 units a month, slide to 32,000 units a month. The Discover 110 and 135 were launched with much fanfare, only to be withdrawn.
The hiccups with Discover, a focus brand besides the Pulsar for Bajaj, cost Bajaj market share, as well. At 14.55 per cent in July, the Bajaj's share in the domestic motorcycle segment was at an all-time low. A sustained aggression from Honda Motorcycle and Scooter India saw it sail past Bajaj to clinch the second spot.
Positioned as a brand associated with high mileage, the Discover did well upon relaunch, but the series of versions and their variants took an inadvertent toll. As analysts feared, the supply glut of versions under Discover confused buyers enough to drive them away.
"As long as you were selling the 125-cc bike, it was fine; the minute we changed that to 110-cc or 135-cc, consumers did not accept it. That has taken a toll on the brand. If we go to the market with a new 125-cc it will not cut ice because there are many 125-cc (bikes). There's no 150-cc commuter bike in the market and so we positioned the Discover like that", said Rajiv Bajaj earlier.
Bajaj has had a rough year so far compared to the industry. The company posted a drop of 12 per cent in domestic sales in the April-October period at 1.15 million units. The industry during the same period grew by 13 per cent at 9.63 million units, led by Hero and Honda.
Riding high on the back of the new Discover, and looking forward to four new launches lined up in the final quarter of 2014-15, the two-wheeler manufacturer hopes to raise its market share to 23 per cent from the current 18.5 per cent. Investors hope that the Discover 150 gives it a reason to rejoice and does not go the way its predecessors have gone.
