Date:19/05/2005 URL: http://www.thehindubusinessline.com/2005/05/19/stories/2005051902690200.htm

Back Bajaj Auto to revamp 3-wheeler product range

Sudha Menon

Pune , May 18

BAJAJ Auto Ltd (BAL) has decided to replace its entire three-wheeler portfolio and go back to the drawing board for a range of new products in the three and four-wheeler segment. The company will set up a new plant for these products at its existing facilities at Waluj near Aurangabad.

The Managing Director, Mr Rajiv Bajaj, told Business Line that product development work has started at the company's R&D facilities for a range of three-wheelers, four-wheelers and passenger and goods transport vehicles that will replace the existing models.

"Our three-wheelers were designed in the sixties and I am convinced that we are already five years too late in starting this effort," Mr Bajaj said."In the short term, our three-wheeler business will be under pressure but it contributes to over 20 per cent of our profits and we are convinced that with a new range, profitability figures can be even bettered."

The company's total sales of three-wheelers in the domestic market in fiscal 2004-05 fell 4 per cent to 1,56,312 units from the previous year's 1,63,408.

Its market share in the three-seater-three-wheeler passenger vehicle segment also dropped to 86 per cent from 92 per cent in the previous year. "The small three-wheeler segment is going through difficulty because it is completely governed by permits and there are restrictions on them now in many places," he said.

BAL's goods carrier business, however, grew by 36 per cent (against the industry growth of 28 per cent in the goods cargo segment) to 32,500 units and gained a 1 per cent share of the market.

BAL has a 26 per cent share in the three-wheeler cargo vehicles business where it is pitted mainly against the Piaggio's Ape.

Replying to a specific query, Mr Bajaj said the new facility at Waluj would be benchmarked against the company's motorcycle plant at Chakan and said it would initially manufacture 25,000 vehicles a month.

"We expect to see the results of this effort in three years," he said.

Even as the company's market share in the business has recently dropped due to competition, it has simultaneously revamped its three-wheeler sales channels, appointing 100-150 dealers exclusively to sell these vehicles.

"We want dealers who will focus on selling just this product," Mr Bajaj said.