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Will Bajaj set product mix right with new 100cc?

By Staff /  24 Jul 2012 , 15:04

Faced with an adverse product mix that has impacted its margins and profitability, Bajaj Auto is giving another go getting it right in the entry level bike segment.

Close on the heels of Honda’s Dream Yuga launch, the Pune-based bike maker is planning to launch one more 100cc bike, a report in The Economic Times said today.

Apart from Dream Yuga, the segment already has the Discover and Platina from Hero MotoCorp.

Bajaj’s new bike is slated for launch in October-November, the report said.

The catch for Bajaj Auto is that its earlier launches in the segment, namely the Caliber and the Wind, did not succeed much. Reuters

At a price tag likely to be around Rs 40,000 for the new bike, Bajaj seems to be taking the rivals head on. But Hero is way ahead in the market share sweepstakes.

The catch for Bajaj Auto is that its earlier launches in the segment, namely the Caliber and the Wind, did not succeed much.

Analysts had said after the company’s April-June earnings that it may have to reorganise its product mix to improve its margins.

Bajaj Auto had registered muted earnings in April-June with net profit rising to Rs 718 crore from Rs 711 crore a year ago. Net sales rose to Rs 4,713.6 crore from Rs 4,535.4 crore. The country’s second largest two-wheeler maker’s sales volumes dropped nearly 1 percent to about 1.08 million units.

In a post earnings note, HDFC Securities said the company’s year-on-year EBIDTA margins of were stable but sequentially margins could not sustain on account of higher input cost, adverse product mix and higher employee cost.

“BAL has taken a price hike in domestic market to pass on the input cost pressures. Further new launches could help the company improve product mix thereby aiding margin expansion,” the brokerage said.

The unique selling proposition for the new bike is likely to be the “latest technology at an affordable price”, the report said.

Quoting sources, the report said the soon-to-be-launched bike will have features that are not usually found in the value segment.

Industry body Society of India Automobile Makers (SIAM) expects two-wheelers to grow about 11 percent this financial year.

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