The case discusses the business strategy of Bajaj Auto Limited (Bajaj

Auto), a leading Indian manufacturer of two wheelers. Bajaj Auto,

which sold two wheelers in India since 1945, was the market leader in
the Indian two wheeler industry till late 1990s. However, the company
failed to visualize the structural changes happening in the Indian two
wheeler industry since the early 1990s. After the Indian economy was
liberalized in 1991, foreign players entered the Indian two wheeler
industry with their innovative products and sophisticated technology. In
spite of rising competition, Bajaj Auto neither upgraded its scooter
models, nor focused on the rapidly growing motorcycle segment.
In late 2001, Bajaj Auto initiated a transformation process in an effort
to transform its image from being a scooter manufacturer to a
motorcycle company. At the same time, the company continued its
efforts to revive the geared scooter market. The company continued to
invest time and resources in the geared scooter segment even till the
early 2000s when the sales of geared scooters were negligible as
compared to the gearless scooters. Bajaj Auto also failed to introduce
innovative products in the rapidly growing gearless scooter market.
The company lost its leadership status in the scooters segment to
Honda Motorcycles and Scooter India (HMSI). The case examines how
Bajaj Auto became a follower both in the scooter and motorcycle
segment from being the market leader in the Indian two wheeler
industry.
Issues:
Understand the structural changes happening in the Indian two
wheeler industry in the 1990s and early 2000s and its implications.
Examine the growth strategy of Bajaj Auto over the decades
Study the transformation process initiated by Bajaj Auto and its impact
Analyze the shortcomings in the business strategy of Bajaj Auto.
The Transformation
In late 2001, Bajaj Auto started a new advertising campaign to change its
image of being only a scooter manufacturer. In the advertisements, Bajaj
Auto showed motorcycles instead of scooters as part of a conscious effort to
change the company's image. The advertisements showed 'slice of life'
situations of 'new age India'...
What Went Wrong?
According to industry experts, Bajaj Auto, in spite of being the oldest
manufacturer of two wheelers in India, was not proactive enough to visualize
the structural demographic changes happening in India. Till the late 1990s, it
was the market leader in the two wheeler industry. However, it did not

upgrade its scooter models, nor did it introduce new motorcycle models.
Despite the opening up of the Indian economy, and foreign players coming in
with their innovative technology, it continued to rely on its old scooter
models. However, with the competition growing, it was forced to focus on the
motorcycle segment...

Future Outlook
In the first quarter of the financial year 2009-10, the motorcycle unit sales of
Bajaj Auto declined by 14 percent compared to the corresponding quarter of
the previous year. However, the revenue sales figure grew by 29 percent
compared to the fourth quarter of 2008-09. The company attributed this
success to the launch of the XCD 135 DTS-Si, the new Pulsar 150 DTS-Si, and
the Pulsar 180 DTS-Si since February 2009 (Refer to Exhibit V for Bajaj Auto's
Vehicle Models and Exhibit VI for Bajaj Auto's sales performance in the first
quarter of 2009-10)...