PROBLEM FACED BY BAJAJ AUTO LTD..

GROUP - 3Group Members :

• Abhijit Ray• Nirmalya Gupta• Priyanka Banerjee• Ritu Nayan Sharma• Satyajit Paswan• Soham Saha• Soumik Ghatak• Ved Prakash Singh

OVERVIEW : 3-wheelers contribute to over 20% of their profits 3-wheelers are popular means of transport Leading 3-W manufacturers in India : Bajaj Auto, Mahindra &

Mahindra, Piggagio & the new entrant-TVS Motors Bajaj Auto Ltd is the leading 3W player in both the passenger

carrier and goods carrier segment In goods carrier it has FE 2S and GC1000 In the passenger carriers it has brands like RE 2S, RE 4S, RE

4S CNG, RE 4S LPG, RE diesel, RE diesel mega.

Performance of Bajaj Auto Ltd… The company's total sales of 3-wheelers in the domestic market in fiscal

2004-05 fell 4% to 1,56,312 units from the previous year's 1,63,408

In 2005 its market share in the 3-seater-3-wheeler passenger vehicle segment also dropped to 86 per cent from 92 per cent in the previous years

But it recorded a growth of 53% in the Passenger segment during Q3/2006-07

Over 55% of Bajaj Auto’s 3-wheeler passenger carriers were exported during Q3/2006-07-Overwhelming response in the exports market

The company continued to dominate the 3-wheeler passenger segment with a market share of 70.3% next year

But All IZZ NOT WELL…• Bajaj Auto’s market share is falling significantly over the past

years, even when the 3W market has grown by a (CAGR) of 18%JUNE 2008: Bajaj Auto : Market share in passenger carrier declined to

63.6%, Domestic Sales reduced by 12% & Exports crashed by 2% Piaggio Vehicles : Total Sales grew by 20% to 9050 units Market

Share grew to 29% TVS King : It commands 10% market shareYear 2008 -2009 : Bajaj’s market share in 3W Passenger Vehicle

segment fell to 63.6% from 70.3% during the previous year

• While the 3-wheeler industry registered 10.7% year-on-year growth, Bajaj's production grew by just 0.3%

Statistics for 3W Passenger Vehicles

2007-08 2008-09 Rate Of Growth

Industry Sales 375,180 415,411 10.7%

Bajaj Auto Sales 263,598 264,332 0.3%

Bajaj Auto Market Share

70.3% 63.6% 6.7%

What is coming in Bajaj’s way?• Bajaj derives 20-22% of the revenues from the 3W segment and the rest from the 2W segment

July 17, 2009: Bajaj Auto lost market share in the high volume 3-W passenger segment

REASONS:• State governments give permits only to energy efficient vehicles

• Licences released are limited

• Bajaj has limited presence in permit driven areas

• Increased Competition

TVS KING –Big Threat TVS Motor Company entered the 3-wheeler market with the TVS King in 2008

India’s first 2 stroke 200 cc autorickshaw with an electric start, Launched in Petrol, LPG and CNG versions in March 2008

During the first 8 months, the company sold around 4,800 units

Oct12,2009: enjoying market share of 10-40% varying across the towns

2010: TVS Motor's 3W sales stood at 1,710 units last month up from 466 units logged in January 2009

By 2012 the company hopes to get a major share

The cumulative three-wheeler sales for the period April 2009 to Feb 2010 stood at 12,549 units

Already exporting the 3W to Sri Lanka, Kenya and some other small countries in Africa.

What does King offer? The TVS King promises good

mileage Fitted with a higher capacity

engine with the peak torque at lower rpm to take care of gradability without frequent gearshifts

A modern low friction 7-port engine that is high in fuel efficiency drives the TVS King

Attractive multi reflector twin head lamps and single large windshield give clear visibility when driving in the night and in bad weather

Priced very competitively, at a shade below it’s competitors between Rs. 90,000 to Rs. 1,30,000

Showing concern for customers

Employee care :

During the launch announced several welfare schemes for the auto rickshaw drivers

TVSM has tied up with few insurance companies for this

Besides the company also introduced a novel training program for the drivers

TVS eyeing a considerable market share Oct,2009-TVS Motor President (Marketing) H S Goindi said :”We should be

able to capture more than 50 % of the market within 3-4 years.”

“This is a 2-player industry and I don't think we are being over-ambitious,” he added

So far, the 4-stroke vehicle has been launched in 8 states — including Tamil Nadu, Gujarat, Maharashtra, Karnataka, Kerala, Andhra Pradesh and Uttar Pradesh

“ TVS will increase the number of dealerships to 125 from the 70 dealers that it has currently, in another 3-4 months, “Goindi said

TVS currently exports 200-300 units a month

“ We are looking to export 1000-1200 units a month from next year,” said Mr K. Srinivasan, Vice-President for 3-W sales and service at TVS

Still Bajaj needs to be alert

Bajaj has a 58% market share in the passenger carrier segment and TVS is aiming to raise its market share to 50% in 3 years from the 9% at present.

TVS already has presence in 2 stroke and 4-stroke segments in petrol, LPG and CNG variants

Also considering launch of a diesel variant for semi-urban and rural segments

Experts believe it will not be so easy for the company to gain such a large pie of the market

TVS has presence in only 9 states with about 80 dealerships Whereas Bajaj has a pan-India presence with 150 dealer networks Piaggio sells around 15,000 units in the 3W category It has a 38% market share in the passenger market segment in the diesel

category

Watch out for Other challenges

M&M: The Alfa Passenger, post its' February 2008 launch has garnered a 20 % market share within a year

The vehicle, costing Rs 1.46 lakh ex-showroom, is based on customer feedback

Honda India is about to take on the same auto manufacturer in the 3W passenger segment too

TVS Motor to roll out hybrid three-wheeler, Fiero Classic

RE GDI: Better technology

• To deal with this Bajaj Auto has launched a gasoline powered RE –GDI (gasoline direct injection)

• It will achieve substantially lower emissions than even the alternate ‘clean’ fuel CNG vehicles

• Bajaj Auto claims the RE GDI would deliver 33 % better fuel-efficiency than the conventional RE auto rickshaw

• The Engine has been tuned for strong low-end torque to deliver 15% more torque and 25% more power for improved drivability in congested city traffic

• The pilot group of customers to whom RE GDI have been sold are reporting additional income of Rs.80-100/- per day.

To remain distinctly ahead….

Bajaj should position itself with better customer welfare policies

In the 3W passenger carrier the rising sales of competitors are sounding the alarm bells for Bajaj, so it should come up with better product features

Paid heavy price for ignoring the rural market in case of scooters, so it should not repeat the same mistake in case of auto rickshaws

Bibliography

• www.google.com• www.bajajauto.co.in• www.livemint.com

Thank You