The MD and CEO of the country’s second largest 2 wheeler manufacturer, Bajaj Auto revealed some insights about the Bajaj’s growth and product strategy. Bajaj Auto has always focused on the aspect of profitability in the business and that is what makes it stand apart from the rest in terms of a successful company. While the industry average in terms of profit margin in the 2 wheeler business is just 10%, Bajaj Auto has constantly kept its average close to 20%.
This is achieved by reducing their input costs, mainly of raw materials which account for almost 70% of the total cost of a 2 wheeler. Also Bajaj Auto saves huge costs on the marketing and advertisement which is not the case with others. Mr. Bajaj tells that the reason being he targets the same existing customers by focusing on few brands and instils confidence in them that they have a great product at their hand while others since they are trying to sell everything have to focus on advertisement and marketing in a big way.
Coming to the latest product from Bajaj, the RE60 he said that the RE60 has been developed not keeping people who currently ride 2-wheelers and would like to graduate to a 4 wheeler but the current auto-rickshaws who can use this to provide greater comfort levels for their passengers. That is why he doesn’t like comparing the RE60 with the Tata Nano. He also added that this kind of a market is immensely profitable with operating profits almost close to 30% and with Bajaj’s existing presence in this segment, he definitely wants to cash on it.
Source – Business Line