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Backstory: How Hamara Bajaj abandoned its family jewel to reclaim its crown

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Two-wheelers in India had been synonymous with Bajaj. A Bajaj Scooter, which commanded a premium well above the listed price in the market, was an aspirational object for the rising middle class through the 1970s and 80s.

Backstory: How Hamara Bajaj abandoned its family jewel to reclaim its crown
In December 2009, Rajiv Bajaj, managing director of Bajaj Auto made an announcement that flew in the face of the company’s rich history. The company that had largely created the scooter market in India would no longer be making them. To its followers and those with any inkling of its history, it was like Coca Cola announcing it would no longer make Coke or Ford announcing it was exiting the business of cars.
Hitherto, two-wheelers in India had been synonymous with Bajaj. A Bajaj Scooter was a mandatory part of a girl’s dowry and often most families would book one the moment a child was born. In the market, it commanded a premium well above the listed price, which gave rise to a flourishing black market. It was an aspirational object for the rising middle class through the 1970s and 80s.
So when the younger Bajaj made his dramatic announcement, there was a sense of loss. Just three years earlier, the company had stopped making its best-selling Chetak scooter. Hamara Bajaj, the ultimate symbol of the license-permit raj, was making its most definitive response to the reforms of 1991, which the family patriarch Rahul Bajaj had initially opposed. It was fitting that the change was conveyed and masterminded by the new generation mindful of the competitive landscape and the changing tastes of its customer base.
Henceforth, Bajaj would only make motorcycles, which represented the post 90s India. While there was disappointment over the decision, it had been a while coming. Through the 1990s, young Indians found the whole idea of a scooter cumbersome and boring. The phase coincided with the rise of a clutch of new motorcycles led by Hero Honda whose “Fill it – Shut it – Forget it” promise completely changed the dynamics of the two-wheeler business in the country. In 2010, nine motorcycles were sold in the country for every two scooters sold.
In this new market, Bajaj found itself playing catch up. The leader had become the follower and a proud legacy was in serious danger. Rajiv Bajaj had to act, and fast. Over the next few years, the company would claw back much of the lost ground and while Hero would continue to lead with its numbers, the profits were back at the company set up by the legendary Jamnalal Bajaj in 1945.
And what a ride it had been. Few companies have so completely dominated a mass market product segment quite like the Pune-based manufacturer did. Beginning in 1948 by trading in imported Vespa scooters and three-wheelers, in 1960, the company set up a plant to manufacture them in technical collaboration with Piaggio of Italy. While the agreement ended in 1971, Bajaj went on to ramp up production and became the unrivalled king of the market. Along the way, it had imperiously dismissed the challenge of pretenders like LML and the public sector Scooters India. None of them lived to tell the tale of their efforts.
But Hero, strengthened by its joint venture with the Japanese giant Honda in 1984 when the two-wheeler market was opened to foreign companies, was an altogether different rival. Its new-generation fuel-efficient and low emission motorcycles caught the imagination of young Indians and sales soared. In a flanking move, as Bajaj switched gears and launched a new line of scooters, Honda countered with its own Activa series of gearless scooters. In desperation, Bajaj launched its own gearless scooter 'Kristal' in 2006, which turned out to be a dud. Its failure finally convinced Rajiv Bajaj that it was now or never and with it, the Bajaj scooter passed away into history.
The story has an interesting footnote: last year when Bajaj Auto decided to return to the scooters market, albeit with e-scooters, the new flavor of the season, it was under the brand Chetak. Old is still gold.
—Sundeep Khanna is a former editor and the co-author of the recently released Azim Premji: The Man Beyond the Billions. Views are personal