Author: Times News Network
Publication: The Economic Times
Date: May 25, 2006
URL: http://economictimes.indiatimes.com/articleshow/1561337.cms
After fighting it out in India and Indonesia,
Bajaj Auto and TVS Motor, will face each other head on in the South American
markets as well. In fact, both companies are trying to position their products
as those between expensive Japanese models and cheap Chinese vehicles.
Brazil is the largest two wheeler market in
South America, selling over 1.5m units a year, followed by Columbia, Peru
and Venezuela. These markets are not essentially untapped and are represented
strongly by Japanese makers like Honda, Suzuki and Yamaha and Chinese two
wheeler makers like Qingqi and Qianjiang.
"Between the top end Japanese vehicles
and cheap Chinese offerings, we feel there is a market in the mid level, for
companies like us," said Sanjeev Bajaj, executive director, Bajaj Auto,
speaking to ET.
The strategy of Bajaj and TVS would be to
offer motorcycles with better-than-China quality and with better-than-Japan
pricing, say analysts.
TVS Motor Company has already announced its
plans to enter Columbia through a joint venture with a local partner. The
company plans to cater to the Latin American markets through the assembly
unit in Columbia.
Bajaj Auto, which already has an assembly
facility in Columbia, sold 60,000 two and three-wheelers in South America
last year. This year, Bajaj is looking at selling 10,000 units of two and
three wheelers per month, in the region.
"We are also exploring options to enter
Argentina and Brazil, either through partnerships or on our own,"
Mr Bajaj added.
Market potential apart, higher margins of
at least 20% are attracting these players to that continent. Also, price is
not a constraint for the buyers in the region, as long as the products suit
their needs.
With increasing competition and pricing pressure
in India, this would help ease pressure on the bottomline of these companies,
observers say.
