The decision to move away from scooters, according to Bajaj, is pegged on three reasons. One, the company is seeing good profitability in selling strong brands like Pulsar and Discover 100cc motorcycles.
“Our EBITDA margin for the second quarter of this year stands at 22 per cent, which is the highest in the auto industry so far. For the third quarter we hope to do better.” Vaishali Jajoo, analyst at Angel Broking, said margins derived from selling Pulsars were above industry average, at 15 per cent.
Secondly, he thinks the worldwide motorcycle market is growing faster than scooters. “There is enough headroom for growth both in the domestic and the export markets. Currently we manufacture around 50,000 units of Boxers in China, which are sold in the export market.” The Boxer is sold as Platina in India.
Lastly, address the top end with KTM motorcycles. The company has a 31.72 per cent stake in Austrian motorcycle manufacturer KTM, which manufactures motorcycles of 250cc configuration.
“So, we make more money by being focused as motorcycle specialists rather than producing everything and making no money at all like the Chinese manufacturers,” Bajaj added.So has everyone abandoned the Vespa-styled manual shift scooters? Sad! Sad! Sad!
"The company is putting in all of its resources towards becoming the number one motorcycle manufacturer in the world." Anyone want to take bets on how that will shake down?