Rajiv Bajaj says partnership with Triumph is about providing affordable aspiration to customers

While the price of the Scrambler 400 was not disclosed during the launch event, it is expected to offer a similar balance of affordability and aspirational value.

The Speed 400 will hit the Triumph dealerships in the second half of July, presenting an exciting opportunity for bike enthusiasts to experience the thrill firsthand. On the other hand, the Scrambler 400 will be available slightly later, with an expected launch in October.

A: First of all, we already have our own brand, the Dominar 400, and of course, the KTM 400s in this segment. So the segment is not new to us as such. For us, it is not just a new partnership and new products, but also a new plant at Chakan, our second plant there. I think we have done a great job, I must congratulate Joe and Pradeep, and the teams for having done a fabulous job, both as R&D and as supply chain. To have been able to achieve what I would candidly say are the highest specs we have ever been challenged to achieve, particularly in terms of aesthetics of design, that Triumph is expected of us, and at the same time to have done it as you say at such a competitive cost. It is really remarkable I think, it sets a new standard. And I think it's fair to say that without setting new standards like this, it is very hard to compete in a cluttered and mature space. So it has taken five years, as I like to say on a lighter tone, we first met with Triumph in 2007, although the project was kicked off only in 2017. So in a way it has taken 16 years to come to this day after we first started. So that's a world record in itself that the partnership has taken 16 years to fructify into actual products. But yes, very competitive products, both in terms of performance and cost.

A: This needs a little longer answer in the sense in 2007, we were working towards our strategy to be what we had defined as being the most versatile and complete motorcycle manufacturer in the world. So we knew that with our own brand, we could address the mass premium and the mass space, but to address advanced markets and the premium or lifestyle segment, we didn't think quite frankly that our brand could carry itself there. Of course, we could have designed the products for those segments as we did eventually with KTM and Triumph. But we would not have pricing power if we went in the Bajaj brand. I am a believer in the maxim, that the opposite of a truth is another profound truth, Niels Bohr said this. So we said to ourselves, there will be two mind-sets at the two ends of the spectrum, a very sporty racing mind-set, and the brand for that is KTM like no other. And then there will be the very classic mind-set for coll riding, if I may call it that, and there is no brand in my view better than Triumph to address that space. So that is how in 2007, we actually met up with both these companies.

With KTM things progressed faster, but nevertheless, we followed with Triumph afterwards. As far as Royal Enfield is concerned, I say to people that in the US when the bank robber Willie Sutton was asked, why do you rob the bank? And he said quite simply because that's where the money is. So, I will say to you that today between Bajaj, TVS, Enfield, and Hero - Bajaj has about 50 percent share of the profit of the industry. But there are two profit pools, large profit pools outside of this which have been elusive. One is the Splendor and one is the Royal Enfield. So I think with this brand, the consumer will give us the license to compete in the space that Royal Enfield has done so exceedingly well in. I mean, hats off to Siddhartha Lal for what he has achieved, and hopefully we can make some impact.

A: In volume terms, currently, this probably represents 10 percent of the domestic industry. Because as you know, the bottom of the industry has shrunk a bit. So the bigger motorcycles probably represent close to 10 percent. Of course, as you said, Royal Enfield is head and shoulders above everyone there. But that's in volume terms in terms of revenue, and profits, as we just said, it's much larger than 10 percent. So this is a huge opportunity for any motorcycle maker. In terms of what impact we will have, this only time can tell. I can only say that we have an initial capacity at our new plant for 5,000 Triumph a month. Hopefully, in three or four months, we are able to scale up to that volume. We have to do it carefully, because again, new plant, new people new partnership, new product, new standards, and then from there onwards if the domestic demand continues to expand, and of course, I think from October or November, we expect Triumph orders to come in from all over the world. I am told there's a lot of excitement building up in Triumph markets across the world. So then who knows where that might take us? But we will scale up very rapidly to satisfy that demand.

A: So today it's at 25,000, but that includes about 20,000 for KTM. Because there are months where we do about 20,000 KTM, between domestic and exports, and 5000 for Triumph so that's the construct today. In the next expansion, it can go to 40,000 between these two brands, and in the long-term, it could even go to 80,000 which is a million motorcycles a year. It was always our dream that one day a million KTM and Triumphs will roll out of India and I think we are on our way to realise this dream.

A: I think they are all three the same but different. The reason I say this is because if I just want to take, for example, the two new entrants, Harley and Triumph, I think what they have in common clearly is that they are both very big, authentic brands, with tremendous legacy and heritage. They are basically in the same mind space as far as the consumer is concerned so that is what they have in common. But I think in terms of product as opposed to brand, I think they have taken two almost diametrically opposite routes from what I have seen of the Harley day before. I have not seen the actual product, but from what I have seen in the news, the Harley is leveraging displacement, 30 percent more displacement, and hence the performance that brings, etc.

Whereas with the Triumph, you can see two or three aspects which are different and very distinctively Triumph. One is the very typical Triumph designer styling, the silhouette, which is unmistakable. Then the attention to detail, there is so much detail of such a high standard on this product I mean, it's exquisite. And thirdly, it's not so much about the displacement, which is also 15 percent at 400 CC, but it's really a modern motorcycle. And the proof of the pudding is that Triumph wants to export this to all its markets across the world and stand side by side with their bigger bikes and they would not do that unless it was really the same bloodline. So whether it's a 4-valve, water-cooled, ride-by-wire, six-speed gearbox and all of 40 horsepower it's top of the line motorcycle.

A: I am given to believe by Nick my counterpart there CEO of Triumph that this will indeed go to all Triumph markets across the world. I don't know what their estimates for exports are. I think I would not be wrong if I said that they would be a little unsure themselves because I have been through this experience with KTM in 2007 when smaller KTMs at these price points were something that was completely unchartered waters for them.

So equally for Triumph, a 400 cc at this sort of a price point for exports is just completely unfamiliar territory. So it becomes very difficult in this kind of whitespace to guesstimate what might happen. But I think as you say, we will know better by the end of the year.

A: I guess there's more than one way to do this. Our belief is that, what is the difference between a brand and a product, sometimes we use these words interchangeably. So to my mind, a brand is equal to of course product plus the story of the brand, plus the consumer experience that comes with the brand every time you interact with it as a product or communication or club or whatever it is. So in keeping with this approach, Triumph is very clear that Triumph Motorcycles will be sold exclusively through Triumph dealerships. So there will be no Triumph motorcycles in Bajaj dealerships, or in KTM dealerships where which are dedicated to KTM and Husqvarna. So we are going to expand the existing 16 or so Triumph dealerships which have existed for the big bikes to I think about 100 odd dealerships in a few months' time and which will be carrying only Triumph.

Many of them which are in the metros will carry the big Triumphs as well as middleweight Triumphs, whereas those that are in the relatively smaller places, will carry largely the smaller ones. But the short answer is the Triumphs will only be sold through Triumph dealerships.

A: In setting up the new plant at Chakan, which includes the land, building, and equipment we have put in a little over Rs 200 crore. Ours is not a very capex-intensive business. That's why we are still sitting on Rs 18,000 crore of cash at the end of it.

But having said that, it is very difficult to say how much of that investment is Triumph specific because through the same assembly line, through the same paint line, through the same machining line, will go the KTM and also the Triumph with a change in jigs or fixtures or hangers or other tools. So I can't say this investment is only for KTM or this is only for Triumph. Whether it's the people at the plant, the equipment, the plant itself, even our supplier investments, and even at the front end although the physical dealerships are separate, very often there is the same dealer standing behind that, who is a Bajaj dealer, a Chetak dealer, a Triumph and a KTM dealer. So investments are largely common.

A: So currently Triumph has prioritised the two most important segments, the street segment Roadster and the sort of Scrambler or on/off road. But as they showed us in their presentation, they are into adventure motorcycles, cafe racers, and so many other form factors as well. So, this is a question that Triumph has to answer. I am not at liberty to share any details. But I can tell you there are several new products that are in the pipeline. And I would think that one new product a year would be the minimum, because India is the world's largest market for these motorcycles, and certainly there are more than one or two kinds of consumers there.

Secondly, if we are going to ask our dealers to put up exclusive dealerships, then certainly we have to make the effort to put more than just two motorcycles out there for them to generate adequate business.

A: We have something very special in the works within this fiscal year, towards the end of it hopefully for those who absolutely loved the Pulsar. The next big thing is with the Pulsar. We have done a reasonable job with the Triumphs. It's no secret that there are new KTMs around the corner because the whole KTM line-up will be refreshed significantly in the coming months. But in the end, the one brand or product which in 2001 changed Bajaj from a scooter company to a motorcycle company and from a domestic company to a global company as the world's favourite Indian and today the most valuable two and three-wheeler company in the world is Pulsar. So we are going to pay homage to the Pulsar in an amazing way, hopefully before March next year.

A: I think what is "cheap" for one person is "fortune" for another. So it all depends on one's own context. And actually, the reason for the success of our partnership with KTM, which saw KTM go from 65,000 motorcycles a year in 2007 to becoming the number one premium motorcycle in the world by volume now at over 3,00,000 motorcycles a year is that we did not comply with this implicit assumption that you can either buy something that's affordable or something that is aspirational. What KTM-Bajaj brought to the table and if I may say so, then motivated TVS-BMW and even Bajaj-Triumph to come together, was to be able to offer affordable aspirations to that customer. I think that's what we are doing with Triumph. I don't think we are offering a premium product, I don't think we are offering a cheap product, we are offering great value for a great brand and a great product. And it's still at a small premium to the current market leader but that's because there's a hell of a lot more content on the Triumph motorcycle.

A: First, I must say that if I were a contract maker, I would essentially be building to print the Triumph for suppliers, but that's not the case. I would not be wrong in saying that first as far as R&D or design development is concerned while as brand custodians everything is defined by Triumph, but if I were to guesstimate the share of man hours that have gone into designing, developing, prototyping, testing, etc. of these motorcycles, probably 80 percent of those man hours have been invested over here by Bajaj engineers. So brand new motorcycles and that's the effort we have put in developing them.

Otherwise, if these were completely designed and developed by Triumph in the UK, we would not have hit the sweet spot in terms of course. Number two as you are probably aware that the Indian market, the subcontinent, most markets in Africa, and a couple of markets of Latin America and ASEAN will be managed directly by Bajaj in terms of all - marketing, sales everything. So, if I may say so, the brand custodians of Triumph for example, we will be so in Colombia, we will be so in Myanmar, Cambodia, and as I said in the subcontinent, etc. So if you are a contract manufacturer, you do not participate in design and you certainly don't manage the market.

Having said that, at this moment there is no equity relationship. I don't think equity in itself is a necessary condition for a successful partnership. We have a 40-year partnership still enduring with Kawasaki. Today it is manifested in terms of Kawasaki being our distributor in the Philippines, and there is no equity that either company has in the other. So I think I have always believed that mutuality, of purpose of objective in the marketplace is a far bigger objective and a far more compelling reason for two partners to stay together.

Otherwise, if you look at the history of the Indian motorcycle industry, Hero Honda, Kinetic Honda, LML Vespa, Escorts Yamaha, TVS Suzuki LML, and the Korean maker none of these exist. These were all equity relationships. The only one that endures is Bajaj Kawasaki which was not an equity relationship.

A: Yes and no. No, in the sense that as I said, we wanted to be a complete motorcycle maker, I think between Bajaj, KTM, and Triumph, we are there so in that sense, no. But yes, in the sense that KTM themselves for example, today own not just the KTM brand, which is primarily an off-road or racing brand, as you said, but also the Husqvarna brand which is a very urban chic brand. GASGAS, which is a very specialised trail brand, there may be others tomorrow. I don't know what Triumph's plans are but maybe to expand the Triumph business, maybe for their electric business, maybe they will acquire something difficult for me to say. So in that sense, yes, we may get involved in more brands in the future. And that will help us to address whatever little niches, edges, and corners are left out of this motorcycle pie that we want to participate in so completely.

So as someone said, life should be not necessarily perfect but whole, so we will say we make the most perfect motorcycles, but I think we have a very wholesome motorcycle company.

A: So as Rakesh said on your channel a couple of days back, if you average the sales in May and June, that average is pretty much the same as what we witnessed in April or the months before that. So I think the market did react in June, very sharply adversely to the price increase, but I think it will come back because the OPEX in terms of the savings to the consumer, if he moves from ICE scooter to EV scooter is still positive. So we must believe in that logic that consumers would see that and would come back.

In terms of the loss per vehicle, it is not anymore really because largely the reduction in the subsidy has been passed on. Not all of it, but at the same time, it's no secret that the sell prices have also moderated. So if you look at the total cost picture, I don't think we are any worse off than we were before, but at higher prices.

Now in terms of our own ambitions going forward, we have always said we are not trying to become the number one in this space overnight. We want to tread cautiously and ensure product quality, again, customer experience is very important to us. So, if that means that we are going to be at about 15 percent share or 20 percent share, which is where we are in the cities in which we are present, I believe we are at about 20 percent share, then I consider this to be a healthy market share because then you are top of mind, as the top-two, top-three choices of the customer, and then we will scale up at the appropriate time.

A: Well, not vindicated in the sense I wasn't trying to prove a point. But I was just making an honest statement that number one, as I said, we are not in a capital-intensive business unlike say the car industry. Number two in Bajaj Auto's case we are sitting on a lot of cash and number three most important to me whether the money in the business is ours or somebody else's, doesn't change my attitude towards the money. In fact, if it's your money that I am employing in my business, I must do so with a greater sense of responsibility. So we are not conditioned by the mind-set that there is some cheap easy money floating around somewhere so one can burn this cash because it's not yours so to speak. This is not where one comes from old fashioned as it may sound, but to that extent, I think by having that discipline in mind, we made the right choices. And yes that seems to be playing out now.