News: TVS, Bajaj Auto in race for Indonesian market share

(BS 10/06/2006) Mumbai - Two-wheeler makers Bajaj Auto and TVS Motor company have a competing product strategy for their new base in Indonesia.

Venu Srinivasan, chairman and managing director, TVS Motor Company, said the company would only manufacture and market step-thrus in Indonesia, the third largest two-wheeler market in the world.

A step-thru (examples Bajaj M80 and Hero Honda Street) is a product modelled between a motorcycle and moped.

Step-thrus form more than 70 per cent of the Indonesian and the neighbouring Asean market. The Indonesian market sells six million two-wheelers. Only after gaining a substantial share of say 5 per cent, by 2009, that TVS would think of making motorcycles in the country, he said.

His rival, Bajaj Auto’s executive director, Sanjiv Bajaj, said since the Indonesian market was already saturated with step-thrus made by well-known players like Honda, Yamaha and Suzuki, it made lesser sense to enter the market with step-thrus. Therefore Bajaj would launch only its motorcycles in the market.

“If the strategy of selling step-thrus in Indonesia fails, it would be difficult for a come back with motorcycles,” said Bajaj.

However, TVS officials feel there is a big market in Indonesia for ‘less on expense yet high on quality’ TVS step-thrus. “We will be able to offer good step-thrus priced lower compared to Japanese ones,” they said.

According to a Mumbai-based two-wheeler analyst, the strategies of both the companies would succeed regardless of the two different segments their products cater to.

Both Bajaj and TVS will begin their Indonesian operations by the end of this financial year.

Bajaj has formed a joint venture with Indonesian company PT Abdi Raharja for setting up a manufacturing facility for two and three-wheelers in the country.

TVS Motor will invest $ 50 million (Rs 219 crore) in a two-wheeler facility in Indonesia.

Bajaj Auto’s two-wheeler exports for the financial year 2005-06 grew by 34 per cent at 1,74,907 units compared to 1,30,945 units reported in the previous year.

TVS exported around 80,000 two-wheelers during the year- ended March 2006. However, both the companies have negligible step-thru exports.