A formal announcement of a possible brand acquisition is likely during Auto Expo, the annual automotive show hosted by the Confederation of Indian Industry (CII), in the Capital in early 2008. Bajaj Auto is in the fray to buy Triumph, a premium bike maker in the UK.
"Bigger bikes will need to be developed and we understand that most of this market for bigger bikes will be outside the country. And therefore, an acquisition of a recognised brand makes sense. It is likely to be a complete takeover or a majority stake buyout," said Rajiv Bajaj, managing director, Bajaj Auto.
A big-ticket European brand like Triumph will not only put Bajaj products in the premium lifestyle range in India, but also help it expand to developed markets where such bikes tend to dominate. Mr Bajaj said the decision not to pursue Ducati was partly influenced by the fact that the company was in loss-making mode. “I don’t think it makes business sense to buy a struggling brand. While the brand may have the recognition, it is difficult to work around other problems,” he explained.
The acquisition of a marquee brand will also shape Bajaj's future product portfolio. Broadly, the plan is to keep the Bajaj brand focused on the 125-600-cc segment.
Bajaj Auto's thrust on exports is likely to continue, and the company has no plans to establish a manufacturing base abroad or produce bikes catering particularly to export markets. "A BMW does not change a single spring when it is sold in other export markets, and that's the power of the product. I do not think it is profitable to design products for key export markets," said Mr Bajaj.
I hope this acquisition goes through successfully, keeping my fingers crossed.
Source : economictimes.indiatimes.com
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