India's Bajaj Auto to make 20,000 new bikes

Bajaj Auto Ltd., India's No. 2 motorbike maker, plans to make 20,000 new motor bikes in September and raise output beyond 50,000 in December or January.


Bajaj, which is in preliminary talks with French car maker Renault on making "very competitive" vehicles in India, is betting a new motorbike will perk up flagging sales and bolster its higher-margin range.

Bajaj's new 125 cc bike, called Exceed, is aimed at weaning customers from its lower-margin 100 cc bikes, which compete in an extremely price-sensitive and crowded market dominated by leader Hero Honda Motors Ltd.

"We are now clearly focused on the bigger bike. We are not going to fight to retain share in 100 cc," the launch of a new engine technology for the bike. The new engine technology for the bike, called DTS-Si, is an upgrade of its DTSI technology, or digital twin spark ignition.

"More than a third of the motorbike market is 125 cc and above, where the margins are 15-20 per cent. On 100 cc bikes, we don't make money,".

Production would be further raised when the company starts making the new bike December or January. Initially, the company would concentrate on the domestic market, but would look at exports beyond 2007/08.

At 0953 GMT, shares in the company were down 1 per cent at 2,286.30 rupees in a Mumbai market that was down 1.2 per cent. Bajaj, which has more than a third of India's motorbike market -- the world's biggest after China -- had cut its output by 20,000-30,000 units a month following a drop in demand due to high interest rates that led consumers to postpone purchases.

Sales of Bajaj motorbikes in the fiscal year that started in April are down 12 per cent from the same period a year earlier. It has said it expects sales to revive from September, with the new bike and purchases spurred by the festival season.

In May, Bajaj split its manufacturing and finance operations, and in July restructured its auto business, creating separate units for R&D, engineering, two-wheelers, commercial vehicles and international business.

News Source:
http://economictimes.indiatimes.com/