In short, can the Hero Honda-Bajaj Auto rivalry ever end up in a result where Bajaj becomes #1? Clearly, this story is as much about Bajaj as it is about Honda; for the historic gripes of rivalry, which had till now only included moves, counter moves, claims, counter claims, has now become a testy, take-no-prisoners war by Pawan Chabra
Bajaj’s efforts are going towards spreading its reach wide in the automotive segment, be it the deal with Nissan to jointly develop a small car, or the alliance with KTM, that will empower the company to enter new markets and access superior technology. Moreover, the deal with Kawasaki to bring its products to the Indian market is also expected to be a positive contributor to the company’s fortunes. Kawasaki’s second entry into the market is expected to generate a lot of excitement as the company has recently announced that it will open a plant in alliance with Bajaj and focus on its core strengths to gain more volumes in the Indian market. “Bajaj’s strategy appears to be targeting for leadership position in niche markets which enable it to earn decent margins and profits. It is also enjoying leadership position in some of the countries overseas. The international markets are helping the company to achieve growth and a competitive scale of production,” explained Avinash Gupta, auto analyst at Bonanza Online.
So while both companies agree largely that the motorcycle segment is the one that merits a majority share of their energies, even their views on which other growth opportunities they should now explore are radically different. On that subject, the fate of Bajaj’s proposed small car launch could provide some invaluable answers.
But Rajiv Bajaj has a few sticky issues to handle from within his family. And first in the list is his father’s opposition. The way young Rajiv Bajaj is taking the company forward has upset his father Rahul Bajaj at times. Their debate is mainly about the conventional argument between doing business with contemporary logic as opposed to doing business with emotions. The most famous issue that came to notice was when Rahul Bajaj had expressed dismay over his son’s move to exit the scooters market. “I don’t understand why Bajaj Auto can’t develop a scooter that will sell in good numbers,” he had said at that time. It is ironic that when Hero Honda entered with motorcycles, Bajaj was the market leader with scooters. Today, Bajaj has exited the scooters segment while Hero Honda is going strong in the scooters market (with Pleasure; a scooter for lady consumers).
After Rajiv recently decided to drop the parent brand name (Bajaj) altogether from many of their products with distinct positioning, Rahul Bajaj said that he was unhappy with this move as well, highlighting the fact that being the Chairman of the company, no such proposal has reached him. Under the announced plan, the company is planning to drop the brand name ‘Bajaj’ from its models of motorcycles and the rear engine auto-rickshaws to promote each of the aforementioned products as independent, stand-alone brands. Rajiv contends that the Bajaj brand is too diluted to be retained for these product categories.
While the logic behind that move may or may not stand, what is surely evident is the fact that the coming quarters will see the Indian two-wheeler market be witness to one of the most ruthless marketing warfare witnessed in Indian industries. In the past, while Hero Honda has steamrolled opposition to gain leadership, Bajaj Auto has not shied away from taking competitors to courts too! The gripes of this historic rivalry are well on its way to become one of the classic business school case studies...
Bajaj’s efforts are going towards spreading its reach wide in the automotive segment, be it the deal with Nissan to jointly develop a small car, or the alliance with KTM, that will empower the company to enter new markets and access superior technology. Moreover, the deal with Kawasaki to bring its products to the Indian market is also expected to be a positive contributor to the company’s fortunes. Kawasaki’s second entry into the market is expected to generate a lot of excitement as the company has recently announced that it will open a plant in alliance with Bajaj and focus on its core strengths to gain more volumes in the Indian market. “Bajaj’s strategy appears to be targeting for leadership position in niche markets which enable it to earn decent margins and profits. It is also enjoying leadership position in some of the countries overseas. The international markets are helping the company to achieve growth and a competitive scale of production,” explained Avinash Gupta, auto analyst at Bonanza Online.
So while both companies agree largely that the motorcycle segment is the one that merits a majority share of their energies, even their views on which other growth opportunities they should now explore are radically different. On that subject, the fate of Bajaj’s proposed small car launch could provide some invaluable answers.
But Rajiv Bajaj has a few sticky issues to handle from within his family. And first in the list is his father’s opposition. The way young Rajiv Bajaj is taking the company forward has upset his father Rahul Bajaj at times. Their debate is mainly about the conventional argument between doing business with contemporary logic as opposed to doing business with emotions. The most famous issue that came to notice was when Rahul Bajaj had expressed dismay over his son’s move to exit the scooters market. “I don’t understand why Bajaj Auto can’t develop a scooter that will sell in good numbers,” he had said at that time. It is ironic that when Hero Honda entered with motorcycles, Bajaj was the market leader with scooters. Today, Bajaj has exited the scooters segment while Hero Honda is going strong in the scooters market (with Pleasure; a scooter for lady consumers).
After Rajiv recently decided to drop the parent brand name (Bajaj) altogether from many of their products with distinct positioning, Rahul Bajaj said that he was unhappy with this move as well, highlighting the fact that being the Chairman of the company, no such proposal has reached him. Under the announced plan, the company is planning to drop the brand name ‘Bajaj’ from its models of motorcycles and the rear engine auto-rickshaws to promote each of the aforementioned products as independent, stand-alone brands. Rajiv contends that the Bajaj brand is too diluted to be retained for these product categories.
While the logic behind that move may or may not stand, what is surely evident is the fact that the coming quarters will see the Indian two-wheeler market be witness to one of the most ruthless marketing warfare witnessed in Indian industries. In the past, while Hero Honda has steamrolled opposition to gain leadership, Bajaj Auto has not shied away from taking competitors to courts too! The gripes of this historic rivalry are well on its way to become one of the classic business school case studies...
Pawan Chabra
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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