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Bajaj Auto chalks out future plans - Views on News from Equitymaster
 
 
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  • Dec 28, 1999

    Bajaj Auto chalks out future plans

    Bajaj Auto has outlined plans to correct the sharp fall in two-wheeler market shares and cope with the strategic shift in the motorcycle market.

    Bajaj Auto is India's largest manufacturer of two/three-wheelers with a presence in all three segments of the two-wheeler market - scooters (64% market share in August 1999), motorcycles (26% market share) and mopeds (6% market share).

    On the top of Bajaj Auto's revamp agenda is a restructuring of its supply chain management. The company plans to cut downsize its supply chain management. It has also taken steps to ensure quicker decision-making and information flow. The company is acting on the recommendations of AT Kearney.

    As reported by a leading financial daily, the company has not dropped the idea of entering the car business, and is waiting for some consolidation in the car segment before it thinks about it seriously.

    At the same time, the company is also pursuing plans to buy into Piaggio of Italy. It is also thinking of floating a mutual fund vehicle to manage its considerable investments.

    While trimming the supply chain is step in the right direction, the same cannot be said of the diversification in the car business. The company's background in this business, or the lack of it will be its biggest roadblock. The business requires heavy funding and the gestation period is very long. This could have an adverse impact on its core two wheeler business. If Bajaj Auto has not been able to make a dent in motorcycles, which is just an extension of scooters, there is no reason to believe that it will be a big hit in cars, which is more competitive than motorcycles.

    Its investment in Piaggio (when it happens) will benefit the company, giving it a foothold in European markets. It will also increase access to technology.

     

     

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