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Monday, 13 May, 2002, 11:45 GMT 12:45 UK
Bajaj motorbike sales soar
Bajaj Aspire
Bajaj Auto posted growth of 55% in the motorcycle segment
Shares in Bajaj Auto have risen by almost 6% after the firm, India's leading scooter manufacturer and number two motorcycle maker, reported a surge in earnings.

Profits for the first three months of 2002 were 132% higher than a year before, as motorcycle sales boomed, the company said.

"We plan to sell 900,000 motorcycles this year on expectations that the segment would grow by at least 20% to 22% in the next two to three years."

Rajiv Bajaj, president, Bajaj Auto
"This growth in the industry was largely fuelled by the motorcycle segment, which grew by 41%," company president Rajiv Bajaj said.

"However, the company outperformed the industry by posting a growth of 55% in the motorcycle segment,"

All motorcycle makers in India, the world's second-largest market, have posted bumper profits over the past year as falling prices, rising incomes, cheaper financing and a continuing shift in buyer preference to motorcycles from scooters have pushed sales.

Bajaj was India's leading two-wheel maker until last year when Hero Honda, a joint venture with Japan's Honda Motor, overtook with sales up 38% to more than 1.4 million bikes.

Motorcycle boom

Bajaj Auto said profits hit 1.48bn rupees (20.7m) over the quarter, up from 639m rupees a year earlier.

And full-year results grew by 98% to 5.21bn rupees, with sales of 1.358 million bikes.

Motorcycles, using technology from Japan's Kawasaki Heavy Industries, make-up 55% of the company's product portfolio, led by its Boxer, Caliber-Croma, Pulsar and Eliminator models.

"We plan to sell 900,000 motorcycles this year on expectations that the segment would grow by at least 20% to 22% in the next two to three years," Mr Bajaj added.

Motorcycles vs scooters

Sanjeev Bajaj, vice-president of finance at Bajaj Auto, told the BBC's World Business Report that there were two major reasons for increasing motorcycle demand.

First, rural incomes have risen and motorcycles are suitable for those living in outlying areas where roads may be worse.

Secondly, there had been a change towards more fuel efficient two-wheelers and motorcycles outperform scooters in this area, Mr Bajaj said.

"It has taken scooter manufacturers, including us, a few years to come out with the right fuel-efficient scooter engines," he said.

"But in this interim period we have lost out on the entire volume growth to motorcycles."

Bajaj Auto's sales of geared scooters declined by 6.4%, ungeared scooters by 12%, and mopeds by 44%.

Profits for the year were also boosted by a 1.17bn rupee premium income on an insurance venture and the absence of any extraordinary costs.

Sanjeev Bajaj, Vice-President of Finance, Bajaj Auto
"The results are encouraging this year"
See also:

15 Apr 02 | Business
Hero Honda's results in high gear
24 Oct 01 | Business
Indian motorbike sales soar
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