ADVERTISEMENT

5 steps Bajaj Auto is taking to boost three-wheeler sales

If you missed our coverage, here are the top 10 stories of the day.

An A320 plane under construction in China.
An A320 plane under construction in China.

Bajaj Auto is taking a series of strategic initiatives this year to boost falling three-wheeler sales. With no improvement in the country’s economic environment, the company is trying to improve financing to three-wheeler buyers as well as expand its reach through marketing initiatives.

The company’s three-wheeler sales fell 1.2 per cent to 2.02 lakh units in the last fiscal when three-wheeler sales in the industry dropped by 2.43 per cent. The main reason for this decline was the slowdown in the issue of new three-wheeler permits by states like Karnataka, Maharashtra, Delhi and Andhra Pradesh, as well as high fuel prices and interest rates impacting the cost of purchase and operations. Here are the top five steps that Bajaj Auto hopes will help revive three-wheeler sales:

1. Tying up with public sector banks and grameen banks to provide easier access to credit to three-wheeler buyers: Bajaj Auto has set a target to increase financing by public sector banks to at least 25 per cent of its sales this year from 15 per cent in 2011-12. Currently, most of the financing for three-wheelers is from cooperative banks and the unorganized sector, like the money lenders. The company will even provide services like recovery of loans given to three-wheeler buyers to encourage banks to lend more.

2. Expanding its three-wheeler sales network from 240 sales points currently to 290 sales points this year: The company will open more outlets across the country with focus on Bihar, Jharkhand, Madhya Pradesh and Andhra Pradesh. This network expansion will help the company improve sales of its diesel passenger three-wheelers as they are becoming a popular mode of transport in rural and semi-urban areas.

3. Increase its diesel three-wheeler passenger vehicle sales from 76,000 units to 1 lakh units this year: Diesel passenger vehicles are growing at the rate of 15 per cent CAGR. Targeting this fast growing segment could help the company improve sales. Bajaj Auto has over 90 per cent market share in petrol/CNG three-wheelers, but in diesel three-wheeler passenger vehicles it has a market share of 32 per cent while rival Piaggio is the market leader in the segment with a market share of over has over 50%.

4. Launching product upgrades of its products like Megamax, RE diesel with better technology and ergonomics: The new products will have a 5-speed gearbox and higher fuel efficiency, which can bring down the maintenance cost by half, says Bajaj Auto commercial vehicles president R.C. Maheshwari. These product launches are expected to happen by the second half of this year.

5. Stepping up its marketing efforts to promote alternate fuel vehicles in states like Gujarat (using CNG as the fuel), Andhra Pradesh (LPG) and Karnataka (LPG). While providing easier access to finance and marketing can help the company improve its sales in the long term, increase in permits by states will increase its sales in the short term. So far, industry body SIAM has given a sales growth forecast of 5 to 7 per cent for the three-wheeler industry.