A few weeks back there was mention of GOI approving a new category of vehicles Quadricycles that fall between car and three wheeler. This category of vehicles will cater ONLY in the lighter commercial vehicles and perhaps would not be subjected to stringest road test as passengar car
To me it looks a very interesting case of marketing rather than a regulatory affair. This is a classic case of how a category leader uses Goverment approvals and regulation to secure a future market share
Lets looks from different perspective.
From Market Perspective
It is a well known fact that Bajaj is a market leader in 3 wheeler category selling almost 2.25 Lakhs unit a year and hold lion share of 51 % of market ( Reference from Autobei blog ). So Bajaj has a ready big market to be catered with competition to be left out dwindling thumbs as neither they have reach (Distribution Channel) nor the product is ready. Also
this market is more of a volume game with not very high margin’s. The service element in the product is quite negligible in particular with Bajaj 3 wheelers as sparee parts are available in plenty outside company
channels. With new Quadricycle, a new market of spare parts will also help generate new source of revenues. Competition in the new category is still in planning stage so Bajaj definitely has a lead
From Product Development Perspective
Bajaj RE 60 is not a innovative product, I didn’t liked it’s design neither it has a appeal. BUT it may find it sweet spot with features vs price. That segment may not be necessarily looking for high end feature like
speed, safety, convenience etc. After all Indian Public at large is known for spitting, writing on public vehicles and leaving trashes. Also more than 50 % of roads being muddy, dusty, potholed may not be conducive
for such features like high speed and convenience. A speed of 50- 60 Kmph with no AC may still be OK as customer got an upgrade of vehicle with doors ;-). Think about Auto Rickshaw we still use though the max.
speed is only 35 kmph to catch a train. Looks like scene of a Bajaj Scooter with a full family, 3 wheeler will also be a history.
From Pricing Perspective
As per info available bajaj intends to sell each unit at 1.5 Lakhs approx. Currently cost of a 3- wheeler is approx. 1.3 Lakhs or so. This gives Bajaj a lucrative market to offer upgrade to the existing customers and
with EMI schemes becoming popular it becomes even more so easier with Bajaj Finserve in the same group. Probably with EMIs of Rs. 3000 per month and with an earning of Rs 12,500 per month ( Assuming
making Rs 500 a day for 25 day), it might turn out a viable option.
How does Bajaj Auto gets benefited:
First mover advantage in the market, Bajaj have the prototype ready, it is totally new category and perhaps with Mr. Bajaj (Senior) in parliament managing committees and proving point won’t be that difficult.
Ability to leverage the existing customer relationships be it dealership channel, end customer or administration
Though Bajaj has got first movers advantage, other players like M & M, Piaggio, Tata Motors etc has also made their intentions clear to be in this market. Both M & M and Tata Motors in last decade have demonstrated their strength in NPD and Bajaj can expect some good competition in due course. Bajaj has not been very scuccessful in NPD barring Pulsar but it is no match M & M and Tata Motors. Tata Motors has a successful platform ACE small trucks that can we tweaked, so Bajaj ability to move fast in the market and product development will remain key to success in their initiative