Bajaj Auto starts Brazil journey on a high, gears up for long slog

Time of India

8 hours ago

Brazil has started off on a good note for
Bajaj Auto
but
Rakesh Sharma
, Executive Director, would rather adopt a wait-and-watch attitude.
'Now I realise (how) all these movie producers feel like. They make a good movie but till the time it hits the screens, nobody knows it is going to be hit or a flop. We have done all the research — this, that and the other — but till the time you enter the market, you can't say,' he told analysts during a recent Q&A session following the first quarter results.
For now, Sharma and his team are 'pretty relieved' that Dominar has got accepted 'very well' which means the company will continue the strategy of attacking the top end of the segment. 'We have made a very discontinuous move last month by introducing the Pulsar 150 over there which is aimed at the belly of the market, the delivery boy's segment and the commercial segment. And it's the best-in-class,' he said.
Despite this, 'you have got to really turn your badge' in Brazil because the delivery segment seeks reliability, zero downtime and very fast turnaround at the service centres. 'Therefore, we know that we will have to slog it over there but that is the thin end of the wedge at the mass level,' continued Sharma.
Capacity expansion
Bajaj Auto will be expanding capacity at its Brazil plant to 50,000 units from 30,000 units by the time it hits Q4. Further expansions are planned for 2027 and '28 because the lead times are six months every time for each of these expansions.
'So, we are taking it in a very calibrated way. We are not going big bang but the premium way. We know that there are dealerships and vendors who are now getting reliant on us. So it's not going to be a sharp curve,' said Sharma.
Bajaj Auto will continue to expand the premium envelope in Brazil, build distribution and start attacking the mass segment while building capacity of 50,000 and then 100,000 'in that manner, but step by step'.
As he put it, Brazil is 'not an easy market to crack open' for two reasons: One, its manufacturing and regulatory requirements are such that it needs a certain kind of compliance. Two, is the reality of strong competitors where 'just a couple' of them hold 90 per cent share. The reference is to Honda and Yamaha which have been around in Brazil for many years while Royal Enfield, like Bajaj, is a recent entrant from India.
Long-term game
Beyond this is the fact of Brazil's sheer size which calls for distribution playing a key role. 'It is a long-term game and not something where you can walk in and start to build leadership,' cautioned Sharma. Aware that it would be competing with 'very evolved and mature, high-quality brands', Bajaj Auto's strategy was to enter from the top.
'And therefore, we entered Brazil through the 400cc even while it is a smaller segment than 150cc. But we said that we must enter from the top and build scale as fast as possible. We should build a top-class network which is at par with the best brands in the country — Honda, Triumph, Kawasaki — and our stores should be comparable to them,' elaborated Sharma.
Interestingly when it come to its global three-wheeler business, there was a time when Sri Lanka accounted for a lion's share of Bajaj Auto's overall numbers till it imposed a ban. 'That was the first boot on our side to get off the office table and start to develop markets. Those days, we used to sell 2,000 units in 3-wheelers but then we increased it to 6,000,' he recalled.
However, over the years, 'the transformation which the team has achieved' has been displayed in developing three-wheelers in 23 different countries, some of which had never seen this kind of a vehicle before. One of these is the Philippines where the journey began with 100 units and has since grown to to 2,500 units. 'There are many, many such examples like Ghana, Mexico and Bolivia,' said Sharma.
Focused market development
Hence, this has now become a 'continuous exercise' for the exports team at Bajaj Auto in terms of constant market development. Right now, the product is being seeded across 10 new countries.
'The authorities are being engaged with, so that we have the requisite permissions and the commercial model is being put in place. There are some which seem like stars and there are some which I think will take some more slogging, but I will hold myself back from naming these for competitive reasons,' he added.
Back home in the motorcycle space, Bajaj Auto is going all out to make a splash in the 125cc space. At the time of the analysts session, the announcements on the revised GST structures had not happened but if the 18 per cent levy does become a reality, down from the present 28 per cent, there is every reason for optimism in terms of betting on big growth.
'We are early believers of the 125cc segment even before it became big through the Discover 125 . We extended the Pulsar brand and made a quick entry into the top half of the 125cc segment. We also believe that the best way to take share in the 100cc/110cc segment in a profitable way is to upgrade the customer to an entry-level 125cc,' said Sharma.
Bajaj Auto hopes to present the product to the market soon though there is no indication if it will be a Pulsar brand or some other (brand). 'I think most likely it will be a non-Pulsar brand. But things might get changed closer to the launch time also,' he said.