India’s Bajaj Auto Ltd and the UK’s Triumph Motorcycles Ltd on Tuesday announced a global partnership to make deeper inroads into the so-called middleweight (engine capacities of between 250cc and 600cc) motorcycle market in India, and the world.
Under the terms of the partnership, the two companies will develop and distribute these motorcycles, the market for which is growing rapidly; Bajaj will manufacture them.
Analysts say the partnership will help Bajaj compete with Eicher Motors Ltd’s Royal Enfield motorcycles that are popular in India and becoming popular in other parts of the world. For Triumph, they add, it is an opportunity to offer a motorcycle in a segment in which it currently doesn’t operate and at a lower price.
Royal Enfield makes 350cc and 500cc (and one 535cc) bikes. Bajaj makes one in that category—the 375cc Dominar—and Triumph none. In India, the world’s largest two-wheeler market, buyers have been up-trading to bigger motorcycles. In 2016, for instance, Royal Enfield sold 651,107 motorcycles in India, an increase of 30% from the previous year.
The alliance will help the firms leverage each others’ strength—Bajaj Auto’s manufacturing and engineering capabilities and Triumph’s positioning as premium luxury brand with global reach—the companies said.
The Rajiv Bajaj-led Bajaj Auto has been stitching together a strategy to become a global motorcycle maker and the partnership with Triumph is a step in that direction. Bajaj also owns 48% in Austrian motorcycle maker KTM AG. Encouraged by the success of their decade-old partnership, last month, Bajaj and KTM expanded the scope of their agreement to include Husqvarna Motorcycles, made by a KTM affiliate.
“The partnership is for developing a range of mid-segment motorcycles,” said Vimal Sumbly, managing director at Triumph Motorcycles India Pvt. Ltd. The motorcycles that will be developed ground-up will create a new segment between the commuter and luxury bike segments, which is untapped currently. “Both Indian and global consumers are looking for a premium luxury motorcycle brand,” Sumbly added.
The market for mid-weight bikes, which the duo is targeting, has been expanding.Sales of such models rose to 821,000 units at the end of the calendar year 2016 from 200,000 in 2011 according to Emerging Markets Automotive Advisors (EMAA), a market research and sales forecasting firm. And everyone wants a piece of it. TVS Motor Co. and BMW AG have a partnership to develop motorcycles in this category (and will launch at least one this year) for sale in India and elsewhere.
“The strategic thinking/intent within the partnership is to provide both organizations the opportunity to reach new market segments within the global motorcycle market,” said S. Ravikumar, president, business development and assurance, Bajaj Auto.
Deepesh Rathore, managing director and co-founder of EMAA, described the alliance as “win-win”. The partnership will help Bajaj deal with competition in the middle-weight segment and gain access to newer geographies where Triumph has a presence. For Triumph, “it’s a low-risk entry into manufacturing”, he added.
Triumph will continue to assemble and sell high-end (above 750cc) bikes independently, said Sumbly.
Most analysts expect the first motorcycles from the partnership to roll out in two to three years.
Bajaj Auto shares responded positively to the news, rising 0.82% to Rs2,913.80 on the BSE on a day the benchmark Sensex fell 0.8%.
Source: Mint