Bajaj Auto’s decision to exit the scooter market, has resulted in it losing significant market share, both in the overall two-wheeler market as well as in the motorcycle segment.
Bajaj Auto decided to exit the scooter market in 2010. Since then Bajaj Auto’s motorcycle market share has seen a dip from 24.3 percent in FY10 to 18.3 percent in FY17e (estimated). Also in overall two-wheelers, the Pulsar maker’s share has come down to less than a half i.e. from 27 percent, ten years ago to 12 percent in FY17e. In spite of all this, top executives at Bajaj are maintaining their cool and telling that they are more focused on margins than market share.
Bajaj says it is no more interested in the low margin scooter space, and they are well off making and exporting two-wheelers and three-wheelers across the world. Bajaj is only focused on the high margin segments and it shows already. One, it has remained the world’s most profitable auto company with the highest market capitalisation in its industry, two, its operating EBITDA (Earnings Before Interest Taxes Depreciation and Amortisation) margins at 22.4 percent in FY16 up from 13.6 percent in FY09 are also the highest in the industry, three, the net profit figures have also shot up from Rs. 656 crores in FY09 to Rs. 3652 crores in FY16.
However, Bajaj should actually be worried about the domestic numbers game, because of the low dealer volumes recorded month on month when compared to Hero MotoCorp and Honda. Also despite focusing on the premium motorcycle space, Bajaj has lost almost 13 percent share, 46 percent in 2010 vs. 33 percent in 2017. The sales figures announced for the year ended 31st March 2017 also tell a similar story, Bajaj saw a 14 percent decline in sales numbers from 1,76,788 units in March 2016 to 1,51,449 units in March 2017.
Bajaj Scooter Exit
– Bajaj Auto is more focused on margins than market share
– The company doesn’t intend to enter the scooter space as it’s characterised by lower margins
– In spite of losing market share, Bajaj still remains the world’s most profitable auto company with the highest market cap
