Wednesday, January 9, 2013

A bumpy ride no more

Rajiv Bajaj’s nifty maneuvers were just the right recipe to nurse Bajaj Auto back to health... and wealth.

A few years ago, around this time, Rajiv Bajaj was living his worst nightmare. The young and strapping MD of Bajaj Auto was being assailed from all fronts. It was not just stock market analysts and newshounds that seemed to be baying for his blood, the company’s vendors, dealers and even his own board seemed to be nitpicking his every move. Constant criticisms were new for Rajiv who took over as the MD of India’s second largest two-wheeler maker in 2005. All was well for a couple of years. Pulsar was the new blockbuster in Bajaj’s arsenal and with sales clocking over 30,000 units a month it was making more money on each bike it sold than ever before. Other products like Discover 125cc and 110cc were slowly making a dent in Hero’s dominance in the entry-level segment. By 2006, Bajaj seemed within a whisker’s reach to regain market leadership, a position it had lost in the 1990s.

But then things started going downhill. Rajiv Bajaj famously declared that the company would exit the 100cc segment. He launched the XCD 125cc in an attempt to give 125cc to customers at the cost of 100cc. The strategy backfired. Not only did the XCD bomb but Bajaj’s exit from the segment left the field clear for arch rival Hero Honda (now divorced from Honda) to consolidate its position in the bread-and-butter segment.

The 2008 global meltdown added more grey to the picture. Caught in the midst of slowdown in the domestic market, the young Bajaj found it tough to give a new lease of life to the company which once ruled the industry under the leadership of his father, Rahul Bajaj with products like Chetak and Priya.

Rajiv Bajaj had had enough by 2009. He crafted a three-pronged strategy to deliver sales, profitability and brand image. First, the engineering graduate from Warwick re-entered the entry-level segment with the launch of Discover 100cc. In just four months, the company sold more than 200,000 bikes. Rajiv next announced the company’s exit from the scooter segment, bringing down the curtains on an iconic product line. The twin moves set tongues wagging. Some jeered at the young MD for having to eat his earlier words of exiting the 100cc segment; others openly lamented the decision to drop the scooters line calling it the end of an era. But Rajiv was like a man possessed. His next move was to drop the parent brand from its product portfolio in July 2010 since it was common to different product segments ranging from electricals to insurance to automobiles. The three decisions, in quick succession caught many off guard, including father Rahul Bajaj.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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