Should Bajaj Auto make a come back in scooter segment?

Rajiv Rajaj was confident in 2007 that he wanted to exit the scooter business and concentrate on the motorcycle market. At that time, national scooter sales stood at 1 million units, but today it has risen to more than 3.5 million units. Earlier this week, Bajaj said 'never say never' when asked if there was a possibility of the Bajaj Chetak making a comeback. This is the first time that Bajaj has said anything but a firm no.

But the question remains is this the right time for Bajaj Auto to make a comeback into the scooter segment or whether it should at all make a come back.

Also Read: Worst over; motorcycle sales to grow 20% MoM: Bajaj Auto

Sundeep Bafna of Fortpoint says over a period of time, women started driving more, pushing demand and sales of scooters higher. He believes Bajaj Auto should re-enter the scooter market.

But Bertrand D'souza, Editor-in-chief, Overdrive does not agree with Bafna. He says Baja Auto should stick to its core strength and that is motorcycle business.

Below is the verbatim transcript of Bertrand D'souza, Sundeep Bafna and Sonia Shenoy's interview with Menaka Doshi and Senthil Chengalvarayan of CNBC-TV18.

Menaka: Since you look at this entirely from a commercial business point of view, do you think there is any space or sense or viability in this two wheeler market for Bajaj to re-enter at this point in time?

Bafna: What has happened is over a period of time Bajaj took a call that they don't want to get into scooters. I still remember once in one of our dealer federation meeting where Rajiv Bajaj had addressed our gathering, at that time he had said that we don't want to get in because we are not making any more. So, we don't want to be in that area and we want to get into only motorcycle market.

What has happened in India is over a period of time, women have started driving more. We have realised that they have started making a choice that if the guy wants to buy a bike he has to buy a scooter so that they can also drive it. That was one of the key rings which they forgot or they did not analyse this in their forward thinking.

Menaka: It was a difficult consumer trend shift to have. In hindsight it all seems as if why did they get out of the space but at that point in time the scooter market was very different from what it is today. You are saying it is a market that they should re-enter?

Bafna: Yes, of course they should.

Menaka: Should they re-enter?

Bertrand: I don't think so.

Menaka: Why?

Bertrand: They should stick to their core strength and that is motorcycle business. He has spent a lot of time developing those motorcycles, creating the kind of excitement that he has over the last decade and half. So, why move away from that and divert your attention.

Menaka: Is that the only reason why you think they should stay back?

Bertrand: You have already got inundation of players in the scooter market. Almost every manufacturer has a portfolio. For you to invest that kind of money and get out a product is going to take you three years to get into that market and then you don't know where you stand exactly. You got to take on Honda and Honda is a big player in that segment. I wouldn't take that chance.

Menaka: You said that it is a good idea for them to come back. How do you then argue the point that Honda has more than 50 percent of this market and the other two players are no less competitive – TVS Motors or Hero MotoCorp?

Bafna: I do agree with what you are saying but the market is growing towards this area and that growth will be phenomenal. The issue is they have to decide what they want to come out with. I would say if I was a person recommending something to Bajaj, I would say come out with something like a step-through which is very famous all over South East Asia.

Menaka: What is a step-through?

Bafna: A step-through is like a MAT at one time which Bajaj used to make.

Bertrand: A very fancy Moped.

Bafna: But a fast quick Moped which is very famous in South East Asia. If you go to Bangkok, Taiwan, the women and men both love it and it gives a lot of average. Another thing in the core DNA in Indian blood if anybody has understood it in India is Maruti and Hero Moto in the auto. So, "kitna deti hai" – if they can come out with a scooter, scooterette or a step-through which would give an average of above 65-70.