Can Bajaj Overtake Hero Honda In 2007?

Will India see a new leader in the two wheeler market in 2007? Will Hero Honda, the market leader for over a decade and a half, finally have to give way to Bajaj Auto? These are the some of the questions facing the industry as the battle lines for supremacy in the two-wheeler market are being drawn right now.

The Bajajs are inching too close to the Munjals of Hero Honda for comfort. According to the monthly sales data released in September, the once insuperable Hero Honda posted a 15.3% decline in sales in August 2006 to 2,08,576 units as against 2,46,304 units in August, 2005. In comparison, Bajaj Auto’s sales during the month increased 20.9% to 1,80,570 units (1,49,415 units in August 2005). The gap between the two in monthly units sold was as narrow as 28,006 units in August, as against a gap of over 1 lakh units per month on an average.

During the month, Hero Honda’s market share declined by 9.9%, while Bajaj Auto’s increased by 4.5%. In fiscal 2006-07, Bajaj Auto has posted a 3.6% increase in year-to-date sales as compared to a decline of 7% for Hero Honda. Year-to-date, the Bajaj Auto scrip has risen 45%, compared to a 9% decline of Hero Honda. Bajaj Auto chairman Rahul Bajaj has already sounded the bugle saying his company was aiming for the number one slot in two-wheelers.

“The performance of entry level bikes as far as Bajaj Auto is concerned (CT-100) is really good. Besides, drop in prices of various models along with the huge success of the Pulsar model has helped the company to garner extra market share,” says a Mumbai-based analyst, citing reasons for the recent performances for Bajaj Auto.

Hero Honda, though, is expected to make a comeback in September as Bajaj Auto went through a plant shutdown. “The shutdown has impacted its sales for the month and Honda is most likely to make a comeback when the figures for next month are out,” the analyst says.

But monthly ups and downs only seem like a distortion in a market where Bajaj has been playing the catch-up game on the back of a string of successful launches. Bajaj has read the pulse of the marketplace better in recent times and almost all its launches in the past two years have done better than competition, whether it be the Discover, Pulsar, CT100 or the Platina. But the same can’t be said for Hero Honda whose recent launchesвЂ"Achiever and GlamourвЂ"have failed to get the sales going.

“In the 100 cc segment we have Platina as compared to Hero Honda’s Splendor and Passion. This is an area that we need to consolidate in the future as we sell around 45000 units in the peak season on an average basis and expect that to go 90,000 units as part of our consolidation