Bajaj Auto Ltd.: Overtaken in the Indian Scooter Market
|
Case Code: BSTR216 Case Length: 20 Pages Period: 1999-2006 Pub Date: 2006 Teaching Note: Not Available |
Price: Rs.400 Organization: Bajaj Auto Ltd. Industry: Auto & Ancillaries Countries: India Themes: Market Strategies, Customer Preferences, Competition |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
BAL and the Indian Two-Wheeler Market
Between the mid-1950s and 1980s, the Indian industry operated under what was popularly termed the "License Raj". During this period, entities that wanted to produce two-wheelers were required to secure licenses from the GoI. The production capacity was also determined by the GoI...
The Turning Point
The early 1990s saw a recession in the Indian two-wheeler market. Overall sales of two-wheelers declined by 15% in 1991 and 8% in 1992 . This period also saw a steep rise in fuel prices, which resulted in consumers placing greater emphasis on fuel efficiency when purchasing a new two wheeler. However, even as late as 1997-98, the scooter segment was the largest sub-segment in the two-wheeler market. Scooters, with 42% of the market (in terms of unit sales), were followed by motorcycles (37%), and mopeds (21%)...
BAL Fights Back Following the 'Motorcycle Way'
By the end of FY 2000, the numbers clearly indicated that consumer preference had shifted firmly toward motorcycles with four-stroke engines, and industry watchers predicted that this trend would continue. Geared scooter sales registered a fall of 41% in 2001. "The market has shifted to motorcycles. We will have to follow the trend,"said Venu Srinivasan, chairman, TVS. BAL realized, though rather belatedly, that it would have to cater to the changing consumer tastes and preferences, if it had to survive. Rajiv, who later agreed that BAL had been slow in reading the demand pattern, said, "See, the company failed to anticipate the consumer behavior...
The Fall of an Icon
In January 2006, BAL announced that it had stopped production of the Chetak. With this announcement, BAL closed a major chapter in its history. Rajiv said, "It is a history I would like to forget. My company has lived too long on nostalgia…holding on to anything from the past is a sign of weakness."...
Outlook
The late 1990s saw the popularity of scooters wane and motorcycles emerge as the new favorites in the Indian two-wheeler market. It was believed that the dramatic shift happened because players like BAL did not pay sufficient attention to design, R&D, and customer satisfaction. "The decline of the market for scooters was directly related to neglect of this segment over decades vis-à-vis critical benefits (mileage), contemporary technology, and non-stop excitement of launch of newer and newer models offered on the motorcycles platform,"said Francis Xavier, managing director, Francis Kanoi Marketing Planning Services...
Exhibits
Exhibit I: Bajaj Group of Companies
Exhibit II: A Photograph of the Bajaj Chetak
Exhibit III: New Bajaj Logo (Released in 2004)
Exhibit IV: A List of Two-Wheeler Manufacturers in India (1955-1980)
Exhibit V: Trends in Market Shares in the Indian Two-Wheeler Segment (1996-2005)
Exhibit VI: Emission Norms in India
Exhibit VII: Scooter Models in the Indian Market
Exhibit VIII: Bajaj's New Scooter Models
Exhibit IX: Scooter Market Shares in April-August 2006
Exhibit X: Bajaj Auto Financials
Buy this case study (Please select any one of the payment options)
| Price: Rs.400 |
Price: Rs.400 | PayPal (9 USD) |
