Bajaj plans to take collaboration with KTM to greater heights

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Swaraj BaggonkarMoneycontrolIt will be 10 years in March since Bajaj Auto Managing Director Rajiv Bajaj first met Stefan Pierre, the Chief Executive of Austria’s KTM following which they agreed to form an alliance.“Stefan was here yesterday and we spent the whole day together discussing what has to be done in the next ten years”, said Bajaj on the sidelines of a KTM bike launch event in Pune.The two heads of companies have decided to enlarge their product portfolios, which will not just have new products in the existing range but bigger products with larger engines and steeper price tags as well as collaboration on markets outside India. Plans are also afoot to bring a third company’s product under production from Chakan as well.On the sidelines of the launch of MY17 (model year) KTM RC 390 (priced at Rs 225,300) and KTM RC 200 (priced at Rs 171, 740) Bajaj said that there was a plan to work in the future on 500-800cc bikes, which both the CEOs agreed on.Bajaj’s Chakan-based plant makes 125cc, 200cc and 390cc bikes for KTM which are exported to Europe, US and Japan. From the roughly 60,000 KTM bikes that Bajaj produces it exports half of them.Bajaj owns nearly 49 percent stake in KTM with representatives on the supervisory board of the Austrian company. The Pune-based company also has a technical alliance with Japanese giant Kawasaki for more than three decades.“For sure, they will source many components well over 50-60 percent of the value of the motorcycle from our suppliers over here. Whether we will end up building that motorcycle here or not I don’t know because as a poor Bajaj Auto I would not involve Bajaj Auto in any project that does not do justice to Bajaj Auto itself,” Bajaj said.“We are using the same platform of KTM 200 and 390 for our products. I must see the possibility to use the next high value platform for a relevant Bajaj product. So a year or two down the line we see Bajaj putting out such a product,” added Bajaj.Besides the two KTM brands – Duke and RC – Bajaj will soon add a third brand Adventure in its portfolio. This new range will borrow engines from the existing KTM range but will have a different product architecture. The two companies are presently working on finalizing design for the Adventure 390.Husqvarna, a European brand owned by Stefan, will become the third brand to be produced at Chakan. Bikes under Husqvarna will source the same engines used by KTM and Bajaj but will have their own product architecture. Necessary engineering changes are to be made at the Chakan plant to accommodate the Husqvarna models.The segment above Rs 1 lakh is expected to finish at 120,000 units recording a growth of 9 percent over last financial year when the segment recorded sales of 110,000 units. Over the last five years the segment has grown more than double from 50000 units in 2011-12.Together with Bajaj Auto KTM has a share of 50 percent of the premium sports segment. This is despite the new launches by competitors that include Yamaha, Honda, Mahindra, BMW, Benelli to name a few.Bajaj could extend their partnership outside India as well. They have started shipping KTM bikes of India configuration to Indonesia, a country which did not bear fruits for Bajaj when it previously entered the market piggybacking on Kawasaki.“KTM has given Bajaj the responsibility to start sales in Indonesia. It is a fantastic start. We have already started shipments. The demand is far greater than what we have right. I believe in FY18 we could be looking at 5,000-10,000 KTM sold in Indonesia. This would the first example of such a collaboration. If this arrangement goes well then we can look at other markets”, added Bajaj.