Home Interviews Talking to: Rajiv Bajaj Managing Director, Bajaj Auto Ltd

Talking to: Rajiv Bajaj Managing Director, Bajaj Auto Ltd

Talking to:  Rajiv Bajaj  Managing Director, Bajaj Auto Ltd

Bajaj Auto was established
in 1959 to manufacture two wheelers and three wheelers in collaboration with
Piaggio of Italy. Rolling out its 100,00th vehicle in the year 1970, and
500,000th vehicle in the year 1986, the company has been manufacturing two
wheelers and three wheelers as per the changing needs of the market. Bajaj Auto
International Holdings BV, a wholly owned subsidiary company, acquired 14.51
per cent equity stake in KTM Power Sports AG of Austria in 2007. Selling
motorcycles under the brands of KTM and Kawasaki apart from its own, Bajaj Auto
showcased a four wheeler at the 2012 Auto Expo. With manufacturing facilities
at Chakan near Pune, Waluj near Aurangabad, and Pantnagar in Uttarakhand, the
company has launched a new range of three wheelers called the RE Compact. Rajiv
Bajaj spoke to Huned Contractor on the new RE Compact range as well as the new
developments in the area of quadricycles.



What makes the new series
different from the earlier one?

We have launched the RE
‘Compact’ two-stroke and four-stroke versions fired by petrol, CNG and LPG,
which feature improvements to the ergonomics of the interior and the aesthetics
of the exterior. The biggest improvement is the adoption of Bajaj’s popular
DTS-i technology in four-stroke engines. This means that the new range of
vehicles will have better performance and serviceability. The fuel economy has
gone up by 10-15 per cent, which would translate into annual savings of around
Rs 20,000 compared to the current auto-rickshaws. This can be big savings for
the user because it can create a corpus to invest in another three-wheeler five
years down the line.

Also, vast improvements have
been carried out in terms of durability, thus leading to much lower maintenance
costs. For example, the oil change now needs to be carried out after 10,000 km
as compared to 5,000 km in the existing three-wheelers. That implies lesser
downtime and an increase in income. There is in place a stronger chassis with
the use of reinforcements at appropriate locations. We put the RE ‘Compact’
through customer trials for more than 200 days with over 100 customers and
their responses to the vehicles have been overwhelmingly positive and have
validated the improvements over the current range.

What was the thought
behind carrying out these improvements?

We have always believed in
the philosophy of making the best better. So it isn’t just about launching a
new series to increase our sales. If you look at the whole thing in terms of
numbers, we are in our 53rd year of making three-wheelers and have so far sold
457 lakh vehicles. The brand loyalty for our three-wheelers can be gauged from
the fact that we command a market share of 85 per cent and our closest
competitor sells just one-third of that quantum. So the thought that went into
re-inventing the three-wheeler was to make the vehicle more economical for the
users as also provide greater comfort.

A rickshaw driver, for
example, drives about 200 km a day and we wanted the strain on his or her body
to be minimised. Also, the biggest factor is that of savings. Spending lesser
on fuel and maintenance means a lot to a three-wheeler owner, whether it is
used to carry passengers or as a personal means of transport. On the corporate
front, being the leader in this segment means that we have to defend that
position through continuous improvement and innovation. There is no such thing
as complacency.

What was the investment
for this development platform?

That is one question I cannot
answer because our competitors would very much want to know the figure and
thereby judge what kind of development process we have gone through.

In the larger scheme of
things, aren’t three-wheelers losing ground to cars?

I don’t think so. There is
scope for both to co-exist. If you look at the mobility scenario around the
world, every country is facing the same problem – that of congestion and
pollution. A three-wheeler is therefore becoming

increasingly relevant as the
last mile transport solution in both urban and rural milieus. Even if public
transport becomes better, it still cannot provide a last mile solution. Neither
building new roads to accommodate more cars will lead to any decongestion. On
an average, a car weighing say about 2 tonnes carries 1? persons and that’s a
very inefficient way of transportation. The engine gets used to just drive the
car and not to carry the load of the passengers. Therefore, in some countries
three-wheelers are seen as a better option. Sri Lanka is an example where 87 per
cent of the three-wheelers are bought for personal use.

But what about
three-wheelers being considered unsafe?

A report states that the
maximum number of fatal accidents happen to those using a scooter, motorcycle,
or a three-wheeler. Now the question is how do these accidents happen? The
culprit is the four-wheeler or a truck or a bus because when two vehicles
collide, the force and impact of a car or a truck is bound to crush a much
smaller vehicle. I will give you another example that may seem funny but
reflects the wisdom of our judiciary. A high court order said that
three-wheelers could be dangerous because they can overturn when they travel on
an uneven road where trees have been cut. Now, doesn’t logic state that first
of all the tree should have been cut properly and secondly, the road should
have been built evenly to avoid mishaps. How can you hold the three-wheeler

Coming back to the RE,
will there be a diesel version too?

The diesel-engined
three-wheeler would be a few months down the line. In total, there would be
seven variants of the new RE series.

What kind of demand do you
envisage for the new series?

The market will expand due to
replacement of the old three-wheelers. There is also a new market opening up
for three-wheelers in cities like Hyderabad, Delhi, and Jaipur where the
respective state governments have issued new permits. In Maharashtra, there is
already a notification that makes replacement of vehicles more than 15 years’
old mandatory. There are 45,000 such three-wheelers that need to be replaced in
Maharashtra itself. Therefore, we are very confident of an expanding market.

What about exports?

We have been exporting our
old series to countries like Sri Lanka, Egypt, Nigeria, Peru, etc. The exports
of the new RE ‘Compact’ and the soon-to-be-launched bigger-sized ‘Maxima’ and
‘Optima’ will begin only after we are able to satisfy the domestic demand.

What’s the price of the
‘Compact’ three-wheeler?

The four-stroke variant will
be available at Rs 1,15,000 while the two-stroke has been priced at Rs 1,
03,000, not considering the taxes, etc. It should also be noted that the price
increase as compared to the existing three-wheelers is a mere Rs 1,500. That is
because we cannot upset our position in the market by going in for a drastic
revision. However, for that slight hike, the buyer will now get tremendous
other benefits.

What about the emission

The RE is a truly ‘green’
vehicle. Even otherwise, a three-wheeler emits only about 85 grams per
kilometre of CO2 as compared to about 250-300 grams per kilometre emitted by a
luxury brand car. It has been put on record that Indian three-wheelers are the
least polluting in the world. We certainly can’t say the same for cars
manufactured in India, even those by the MNCs.

Is the current slowdown in
the automotive sector the right time for this launch?

The slowdown is a reflection
of various economic factors and not a verdict about the individual products.

What’s the status about
the quadricycle?

At present, I can say that
the signal has turned from red to yellow but there’s time before it turns
green. There will be a long process of objections, discussions, and policy
framing before a quadricycle will hit the Indian roads. My personal belief is
that eventually a four-wheeler will have to be permitted to be owned and driven
in a manner that’s at least equal to two-wheelers and three-wheelers.

But wouldn’t the launch of
a quadricycle cannibalise Bajaj Auto’s profitable three-wheeler sales?

In a free market, competition
is everywhere. If we can lead in the segment of three-wheelers, there’s good
reason to believe that we can do the same with four-wheelers, especially when
we are already first in the mind of the customer. 

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