Bajaj Auto turns heat on in domestic motorcycle market, unleashes price war

Even as Bajaj Auto's rivals in the motorcycle market maintain that they are unlikely to jump into the price war unleashed by the Pune-based company, analysts believe a sustainable volume and market share gain by Bajaj will force them to toe the line. Bajaj Auto's motorcycle volumes jumped 32 per cent to 1.14 million units in the domestic market in first five months of the ongoing fiscal over a year ago period. Its market share rose to 16.87 per cent from 14.56 per cent in the same period, according to Society of Indian Automobile Manufacturers (Siam).

Signalling competitive pressures, Honda Motorcycle and Scooter India (HMSI) on 17 September announced a cash-back scheme called Shagun cashback of Rs 1,100 across all its models with the exception of the Activa SG. The scheme is valid till 30 September. Setting a stage for a potential price war, which analysts said is akin to what one saw in 2007, Bajaj Auto took a price cut in six of its models including the entry level CT100 model, in March. Since the price reduction in CT100, which competes with the Hero Splendor and Passion, its monthly volume run rate has increased from 20,000 a month to 75,000 a month