Bajaj to assess Chakan plant expansion as demand picks up

A slew of launches over the past few months have pushed demand for Bajaj motorcycles to new recent highs, resulting in the company struggling to meet demand, especially for its premium range such as Pulsar, Avenger and KTM series.

India’s second largest motorbike manufacturer is now exploring ways to increase capacity at its Chakan plant near Pune to meet demand, a senior executive told Business Standard.

The company launched three new models under the Pulsar brand (RS 200, AS 200 and AS 150), three models under the Avenger brand (Cruise 220, Street 220 and Street 150) which followed the KTM RC 200 and RC 390 launched last year.

All these high-margin products including Kawasaki Ninja, which are made at the Chakan plant, one of the three plants the company owns in the country, are witnessing healthy pickup in demand with the Pulsar RS 200 seeing a waiting period of more than three weeks.

"We need to assess if we should create additional capacity at Chakan,” said Rajiv Bajaj, managing director, Bajaj Auto said, “By January we should be able to reach a decision because my understanding is that we will need the new capacity by April".

Bajaj makes Platina and Discover at Pantnagar in Uttarakhand. Waluj near Aurangabad also makes Platina and Discover, besides CT 100 and Boxer and three wheelers. While Chakan has a capacity of 1.2 million units a year, Pantnagar has a capacity of 1.8 million and Waluj has a capacity of 2.4 million units.

The company is constrained by capacity for the newly launched Avenger range where it cannot make more than 20,000 units a month. Therefore it is not starting exports of the model at least in the next 2-3 months.

"We are hoping that Avenger volumes stay around 20,000 units (a month) because I fear we won’t be able to make anything above 20,000. Because of this we have to shift some production of the Pulsars to Pantnagar and Waluj. Next year we would be increasing the exports of KTM which are made only at Chakan as of today", Bajaj added.

Exports form nearly half of the two-wheelers manufactured by Bajaj with Sri Lanka, Nepal and African nations forming a lion's share of importers. Latin America and South East Asia are also important markets for the company. It recently entered the Russian market with the Pulsar range.

The two-wheeler major hopes around 70% of the Avenger volumes to come from the 150cc variant which Bajaj says is 'absolutely the centre of the market'. More than half of the Pulsar volume, where it has eight models, comes from the 150cc model. But the company has seldom advertised the product and has promoted the Pulsar 220, 200NS, AS200 and RS200.

"Everything we have done this year, everything has come from the learning from the Discover. There was a doubt that with us launching several models under Pulsar the consumer will dump the brand like the Discover. But as far as I can see Pulsar has only gained share. There are multiple variants of the Splendor and Activa in the market and they have only gained more share. These three Avengers will be are certainly better than one. We are the market leaders in the segment (and) we need to expand the market", added Bajaj.