India's Bajaj Auto mulls setting up regional hub in Malaysia

  • Business
  • Monday, 02 Oct 2017

Growing together: Amirudin (left) and Rakesh are confident of the sales growth of Bajaj’s motorcycles in Malaysia.

PUNE: Following its tie-up with DRB-Hicom Bhd’s Motosikal Dan Enjin Nasional Sdn Bhd (Modenas), India’s Bajaj Auto Ltd is looking to make Malaysia its regional manufacturing hub as it expands its footprint in Asean.

Bajaj Auto president of international business Rakesh Sharma said this was one of the three pillars of its collaboration with Modenas.

“We want to use this as a hub for advancement into some of the neighbouring countries.

“We already have operations in Cambodia, which we want to increase, and Thailand. And later on, we want to enter Vietnam.

“Having a manufacturing base through Modenas in Malaysia will help us to advance our plans in these neighbouring countries. Asean is our number one priority and within that, there will be a lot of action on the table for Malaysia,” he said.

Bajaj Auto is ranked as the fourth largest three- and two-wheeler manufacturer in the world, and the Bajaj brand is well-known across several countries.

Bajaj Auto produces about five million vehicles a year, of which 45% is for the export market. Asean currently only makes up 6% of its export market.

However, Rakesh said Bajaj Auto’s focus for the time being is to establish its presence in Malaysia and to work with Modenas on its manufacturing capabilities.

Since the announcement of the collaboration last April, Modenas has brought in three of Bajaj’s models, namely the V15, Pulsar NS 200 and Pulsar RS 200.

“For all three models, we have sold close to 2,000 units to-date.

“Our initial plan was to bring in 6,000 next year.

“But with the recent development and market feedback, we are targeting to do much better than what we have targeted,” said Modenas chief executive officer Amirudin Abd Kadir.

“Our primary focus is to get a good market share by working with and through Modenas in Malaysia.

“I will be very happy if we grow twice the market trade. It is difficult to predict a growth rate in today’s world because we are in such a volatile environment.

“But if we are significantly above what the market is growing, I will be satisfied,” added Rakesh.

Bajaj Auto noted that the Pulsar has already garnered a 35% share in the local 100cc-500cc sports motorcycle segment as at September.

Modenas will also be bringing in Bajaj’s Dominar 400 early next year and discussions are underway to possibly bring its Boxer motorcycles to the Malaysian market.

The Bajaj motorcycles are brought in as complete knock-down (CKD) units and assembled at Modenas plant in Gurun.

This will help Modenas increase the usage of its manufacturing lines.

The plant has a capacity of producing 120,000 units of motorcycle per year but is currently only producing 60,000 units annually.

Earlier this year, DRB-HICOM automotive distribution/manufacturing and engineering chief operating officer Datuk Abdul Harith Abdullah remarked that the Gurun plant could potentially rake in an annual revenue of RM600mil if it runs at full capacity.

Modenas motorcycles currently account for about 10% of the automotive segment total revenue.

“We have learned a lot from this collaboration. Between the two of us, we have our strengths and weaknesses and we ride upon that. Especially on the marketing and processes, we are learning from each other,” said Amirudin.

He added that the Bajaj Auto team has been supportive of Modenas’ operations in Malaysia in terms of marketing, providing spare parts and engagement with dealers and customers, among other things.

Bajaj Auto will be working closely with Modenas to bring down its manufacturing cost and add value to its production to serve the local market better.

“We are going to see if there is sufficient value addition where we can later take Malaysia-manufactured products to the rest of Asean.

“Malaysia is a very important and attractive market for us and we are fortunate that we’ve found an extremely able partner and who shares the same value system and like-minded approach as Bajaj Auto,” said Rakesh.

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