The motorcycle market could be in for a shakeup, with British iconic motorcycle brand Triumph and Pune-headquartered Bajaj Auto announcing a new global partnership, particularly aimed at building mid-capacity motorcycles and helping the two companies tap new markets and a wider customer base.
The two companies confirmed on Tuesday that it was a non-equity partnership.
“We hope to bring to the global markets the individual strengths of the partners including brand position and perception, design and development technology, quality and cost competitiveness and worldwide distribution,” Nick Bloor, CEO of Triumph Motorcycles and Rajiv Bajaj, MD of Bajaj Auto, said in a joint statement on Tuesday.
Bajaj Auto already has an alliance with Austrian bike maker KTM. The homegrown maker of Pulsar sports bikes holds a 47 per cent stake in KTM, which makes the popular Duke 200 and Duke 390 motorcycles.
Bajaj says the new partnership will help it gain access to the iconic Triumph brand and its great motorcycles, which will enable “it to offer a wider range of motorcycles within its domestic market and other international markets.”
On the other hand, Triumph, which is predominantly present in the luxury bike market, will be able to “significantly expand the global reach by entering new higher volume market segments, especially within emerging markets,” Bloor said.
Analysts say the partnership will be a win-win for both. Triumph manufactures motorcycles in the UK and Thailand. In India, it only has a CKD (completely knocked down kits) facility. A partnership with Bajaj Auto will help it fully manufacture bikes in the country. This will help it reduce taxes and and price its motorcycles more competitively.
In comparison, Bajaj Auto has lost volumes and market share in the domestic market and this partnership could give it new power and segment to ride on. In the current year till July, Bajaj Auto has sold 11.96 lakh units in the country, down about 11 per cent from a year ago.
“One company can't make everything. So this partnership could benefit both. Triumph can leverage on Bajaj Auto's production and distribution reach in the domestic market. On the other hand, Bajaj Auto can benefit from high-end technology from Triumph,” said Abdul Majeed, partner PricewaterhouseCoopers.
The overall super bike market in India is pegged at around 10,000 units. Triumph, the maker of Street Triple, Bonneville motorcycles, entered India in 2013 and since then has sold over 4,000 units here. It has a market share of around 29 per cent in the over 500cc capacity motorcycles that are priced upwards of Rs 5 lakh. It is a market mainly dominated by foreign companies like Triumph, Harley Davidson, Benelli, Honda and MV Agusta. With a partnership with Triumph, home grown Bajaj will get to play in the segment, which will continue to grow rapidly, say analysts.
“While, the super bike segment is a niche market, more and more people in India can afford these bikes and so the segment will continue to expand,” added Majeed.
Bajaj Auto shares were trading up around 2 per cent at Rs 2,935.25 in afternoon trade on the BSE, even as the wider Sensex was down more than 200 points or 0.7 per cent.
