Bajaj Auto-KTM enters Indonesia to lift exports

Bajaj Auto has announced that it is extending its partnership with KTM AG to Indonesia, which is understood to be the biggest motorcycle market in South East Asia.

Under this new agreement between the two companies, KTM motorcycles branded under the Duke and RC models of up to 400cc will be exported and distributed through a chain of KTM dealerships which will be managed by Bajaj Auto.

“The decision to emphasise our sales activities in the South-East Asian distribution network is the logical next step in our long-term oriented strategy. It supports our presence in the price-sensitive Indonesian market by using synergies from our strong alliance with Bajaj,” said Hubert Trunkenpolz, CSO, KTM AG in a company release.

Commenting on the plans of entering Indonesia with its Austrian ally, Rakesh Sharma, president, international business, Bajaj Auto, said, “Bajaj has successfully established the KTM brand in India with an exclusive channel of 250 KTM stores. For Bajaj Auto, this agreement to distribute sub-400cc KTM bikes in Indonesia is a major step forward. We will endeavour to strongly establish this premium European brand in Indonesia.”

Talking to Autocar Professional, an industry analyst who tracks the company closely added that “Indonesia is a market primarily dominated by Japanese two-wheeler companies. While this is a good move to export and market KTM models up to 400cc through exclusive KTM stores in Indonesia, we do not expect sizeable volumes so soon.”

The company, which earlier had its subsidiary in Indonesia namely PT. Bajaj Auto Indonesia, had shut down its operations during FY2014-15. Sources say that the local arm was unable to perform well in the Indonesian market. TVS Motor Company’s Indonesian subsidiary is also said to be making losses for a considerable period of time.

The official release from Bajaj Auto further quotes that “the existing business relationship with the current importer P.T. Jaya Selaras Sejahtera will remain, but will now fully focus on the model range of above 400cc.”

Industry experts point out that the importer, which has been importing KTM models ranging from the 125 Duke to the 1290 Super Duke into Indonesia, will now streamline its business accordingly.

Bajaj Auto-KTM AG’s joint move clearly highlights a crucial step in terms of an official establishment of the Austrian brand’s identity, an exclusive sales network, and a boost to KTM’s year-on-year declining exports from India.

It can be recalled that Stefan Pierer, CEO and chairman of the executive board of KTM AG, had earlier voiced his plans of taking his brand to the ASEAN and other emerging markets under its alliance with the Indian partner.

“Twelve months from now will give the decision makers at Bajaj Auto a strategic insight based on the first-hand statistics from the Indonesian market,” remarked an auto analyst.