Riding on CNG, can Bajaj Auto raid Hero MotoCorp’s fortress?

livemint.com:

Hero MotoCorp, Bajaj said he would stop making scooters altogether. It was a tectonic shift for a company that built its name riding on scooters. At its peak, the company sold nearly a million scooters every year in the mid-1990s.

The decision was preceded by the dramatic shift from scooters to motorcycles in the domestic market. Motorcycles overtook scooter sales in India for the first time in 1998-99. Over the next decade, the gap significantly widened.

By 2008-09, bike sales, at 5.8 million units, were more than five times bigger than scooters. As Bajaj adjusted to the market and had its first bonafide success in motorcycles with the Pulsar, it dropped the ball on scooters and was promptly overtaken by Honda Motorcycle and Scooter India. Still, the thought of Bajaj exiting the segment entirely was unthinkable for most.

“We will exit the scooter market because we don’t see much sense in it. If we are to be a motorcycle specialist, we cannot make scooters," Bajaj said that day. “One day, God willing, we will be the largest motorcycle company in the world." It has not gone as planned.

While the lack of scooters in its portfolio has hurt (scooter sales in India have nearly tripled since 2010-11 and account for a third of all two-wheeler sales), the company has lost share in motorcycles as well—from 27% in 2010-11 to 18% last year. In the process, Bajaj has dropped from being the second-largest player in the market to being the fourth, behind market leader Hero MotoCorp, Honda and TVS. The company has not thrown in the towel though.