Bajaj Auto (BAL), which unveiled the engine technology it is banking on to catalyse change in the 100cc motorcycle segment, is also tapping partner, Kawasaki for an equally significant technology for one of its future products.
While the 125cc digital twin spark – swirl induction (DTS-Si) technology has been developed indigenously, managing director Rajiv Bajaj said that a ‘unique’ technology that is a global Kawasaki patent would be used on some future products. He did not elaborate.
He said that he expected the new 125cc engine to “revolutionalise the (motorcycle) industry and exceed people’s expectations”. Appropriately enough, the bike will be named Exceed (or variations of the spelling) that will be launched on September 9.
IMPORTANT PHASE
The engine is significant for the company on many accounts not the least of which is the fact that it will allow the company to mount a meaningful challenge in the volumes-driven 100cc segment. The new engine, designed and developed completely by BAL’s R&D, is said to be more powerful and fuel-efficient than both standard four-stroke engines as well as its patented DTS-i engine in the 125cc category. The company says that under test conditions it returns 109 kilometres per litre, thus surpassing the mileage of all current 100cc motorcycles.
“With this breakthrough there is a huge potential and opportunity to upgrade 100cc customers with an engine which offers the best of both worlds – 100cc mileage and 125cc performance," he said. While conceding the possibility of sales cannibalisation of both the 100cc Platina and the 135cc Discover, Bajaj said that it was not a question of losing market share as much a question of increasing profitability.
BAL has a 47 percent market share in the profitable 125cc and 150cc segments, where the margins are 15-20 percent. It has a smaller 24 percent share in the larger 100cc segment, but the company does not make too much money from either the CT-100 or the Platina.
BOTTOMLINE IS KEY
The bulk of the industry, in terms of numbers, is centred around bikes that cost Rs 40,000, and margins here are around 15 percent. Monthly volumes are in the region of 150,000 units a month and Hero Honda has a formidable 90 percent market share. “The good news is that should the new motorcycle click, we will not only add market share we will also become more profitable. The better news is that we can finally put a product into this big market that actually stands a chance of upsetting the leader’s applecart,” he said.
The company’s first target is to sell about 50,000 units a month of the new bike, but Bajaj conceded that there were challenges ahead. “As we attempt to shift segments the rate of shift is not entirely in our hands. There is a lot of inertia and there are manufacturers defending the 100cc territory. We expect conversions to take a little time, but they will happen, and it will come with very rich rewards,” he added.
Head of R&D, Abraham Joseph, said that the fact that the new engine technology had been developed indigenously had contributed a lot to keeping development cost down. This is significant because Bajaj could easily have tapped Kawasaki for the necessary know-how.
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KEEPING COSTS DOWN
“We learnt a lot (by not doing that),” he said. “We learnt about the costing structure even as we learnt how to keep costs down. This would not have happened if we had gone to Kawasaki.” At 23 kg, the new engine is only marginally heavier than a standard four-stroke 100cc engine, which weighs about 21 kg. Yet it produces about 35 percent more torque, and is more fuel efficient than a 100cc engine.
Bajaj indicated that the Exceed would cost around Rs 40,000 making it Rs 6,000 less than the 135cc Discover and about Rs 7,000 more than the 100cc Platina. This is in line with consumer feedback which indicates that they are willing to pay about Rs 7,000 more for a motorcycle with the kind of technology and features as the Exceed. “The potential, therefore, is enormous and the limiting factor could well be production volumes,” he said.
The new bike will be produced in Waluj, with 20,000 units a month being delivered initially. This will be ramped up to 50,000 units a month by January 2008. “We expect volumes to be very high for the Exceed and Pantnagar will definitely produce this bike in early 2008. It makes complete sense to make it in both Waluj and Pantnagar,” he added.
Joseph said that work on the swirl induction technology was born from the need to specialise on the DTS-i technology, for the functions of commuting and performance. “The mother technology is DTS-i, which has already spawned DTS-Fi (fuel injection) and DTS-Si (swirl induction). The performance products will be powered by fuel injection, and the commuting segment will be powered by Si. This will be a benchmark for how good a commuter motorcycle without compromising on economy and performance,” he said.
Bajaj was quick to downplay suggestions that this self-reliance on technology meant that the partnership with Kawasaki had outlived its usefulness.
He reckoned that the partnership was still relevant in the global context if not in an Indian context in terms of specific products.
ENORMOUS VOLUMES
“They are also relevant to us in terms of exports. What started as a small experiment many years ago has, this year, grown into an enterprise that involves a 100,000 Bajaj motorcycles being sold under the Bajaj brand name but built at the Kawasaki plant in Indonesia for that market through Kawasaki dealerships.
“Conversely, they are not relevant as far as designing and producing small bikes. This we can do better than them. They understand and acknowledge this. They would rather source a Discover or Pulsar from us than develop something similar,” he said.
SANDEEP BELAGAJEE