Bajaj Seeks 70% of Sales Outside India, Challenging Honda in Latin America

Bajaj Auto Ltd., India’s second- largest motorcycle maker, plans to win 70 percent of sales from overseas markets, challenging Honda Motor Co. in Latin America, Asia and Africa.

“It will take us several years, but it only shows how much headroom there is for Bajaj even if we only focus on motorcycles,” Managing Director Rajiv Bajaj, who has asked all employees to carry a note with the company’s vision statement in their pockets, said in an interview. Bajaj earned about 30 percent of sales overseas last year.

The motorcycle-maker also eventually aims to roughly triple global market share to 30 percent, either using partnerships with KTM Power Sports AG and Kawasaki Heavy Industries Ltd., or building new networks to win market share from Honda and Chinese rivals. Indian companies including Bajaj Auto and Bharti Airtel Ltd. are expanding in countries such as Indonesia, Brazil and Nigeria as economic growth boosts demand for products from motorcycles to mobile-phone services.

“It will be easy for Bajaj to compete with Chinese products in overseas markets,” said Umesh Karne, a Mumbai-based analyst at Brics Securities Ltd., who has an ‘outperform’ rating on the stock. “The challenge will be to compete with Honda, which has a bigger brand and wider distribution networks around the world.”

Bajaj Auto, the best performing stock in the MSCI India Index this year, declined 1.2 percent to 2,409.65 rupees in Mumbai today. The benchmark Sensitive Index fell 0.8 percent.

5 Million Sales

Bajaj Auto, which sold a record 2.8 million vehicles in the year ended March 31, is targeting sales of 5 million by 2012, according to the company’s vision statement. The company makes Pulsar and Discover motorcycles as well as three-wheelers.

“The whole of the southern hemisphere is relevant for Bajaj Auto,” Bajaj, 43, who practices yoga every morning to keep fit, said on July 5. “There’s always a chance in the market for a strong number 2.”

Honda sold 9.63 million motorcycles last year, including sales at Hero Honda Motors Ltd., India’s largest motorcycle- maker. Honda owns 26 percent of Hero Honda.

Bharti Airtel, India’s biggest mobile-phone company, last month acquired the African assets of Kuwait’s Mobile Telecommunications Co. to enter the continent’s market. Nigeria’s economy, the second-largest in sub-Saharan Africa after South Africa, grew 7.2 percent in the first quarter and 7.4 percent in the previous three months.

Brazil, Latin America’s biggest economy, expanded 9 percent in the first quarter, its fastest pace in more than two decades, while Indonesia’s central bank forecasts gross domestic product to expand as much as 6.5 percent in 2011.

Using Partnerships

Bajaj Auto, which owns about 36 percent of Austria’s KTM Power and has had a technical partnership with Kawasaki since 1984, may use these tie-ups to enter new markets. Bajaj Auto partnered with Kobe, Japan-based Kawasaki to sell motorcycles in the Philippines and it assembles Kawasaki Ninja motorcycles in India.

The world’s biggest maker of three-wheelers also plans to spend about 5 billion rupees ($107 million) on developing a small car in India to supply to Renault SA, Bajaj said.

The automaker may use the low-cost car’s platform to develop more products in future, Bajaj said. The company is aiming to develop a car that will cost owners about 5,000 rupees a month in financing, fuel and other expenses, compared with about 3,000 rupees for a motorcycle.

To contact the reporters on this story: Vipin V. Nair in Mumbai at vnair12@bloomberg.net; Arijit Ghosh in Mumbai at aghosh@bloomberg.net

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