Bajaj-KTM to soon announce ‘very promising alliance’

Bajaj Auto and its strategic Austrian partner KTM AG are going to announce a ‘very promising’ alliance soon, several market analysts closely tracking Bajaj Auto have told Autocar Professional.

According to the people aware of the matter, the announcement could be made within a couple of weeks from now.

Addressing shareholders at the company’s annual general meeting (AGM) yesterday in Pune, Rajiv Bajaj, managing director, Bajaj Auto had said, “We are very close to finalising a very promising alliance. It’s not certain that it will happen, but if it happens, it will open up enormous possibilities for the company.”

KTM, which is now Europe’s largest motorcycle company and in which Bajaj Auto has a 48 percent equity stake, is understood to be in the race along with Harley-Davidson, Royal Enfield, Hero MotoCorp and other global names for making investments in the Volkswagen-owned premium motorcycle brand Ducati.

Volkswagen is understood to have put up the Italian motorcycle brand on sale following the massive losses following dieselgate. It may be recollected that in April 2012 VW bought Ducati for US$ 1.12 billion and also absorbed all of Ducati’s financial liabilities of around US$264 million.

Sources now confirm that the Bajaj Auto-KTM AG combine has almost finalised its new alliance and is working to draft the terms and conditions of the agreement. Although Ducati continues to be the top speculated name, the company is tightly keeping the name of its new partner under wraps.

A market analyst, who wishes to stay anonymous, told Autocar Professional that “according to Kevin D’Sa, president – finance, Bajaj Auto, the alliance is around the corner wherein both the partners have by and large agreed to the various terms and conditions and the agreements are being currently drafted.”

“On being asked what products and product segments the said alliance will cater to, Kevin D’Sa stated that the forthcoming alliance will be for (the development and retail of) motorcycles and will help Bajaj Auto make its mark with branding and positioning where it is not currently present. To me this certainly means that the company is looking to add a new global brand that can represent it at the premium end in India and in the global markets,” another analyst told Autocar Professional.

In the context of expanding its current motorcycle portfolio to newer segments Bajaj Auto, which owns 48 percent equity in KTM, is limited with sub-400cc motorcycles under its current alliance with the Stefan Pierer-owned company. The forthcoming alliance, therefore, can help Bajaj Auto roll out premium motorcycles with an engine displacement of more than 400cc.