Budget 2020: 'Overregulation' killing auto industry, says Rajiv Bajaj

Bajaj's remarks come against the backdrop of one of the most prolonged slowdowns plaguing India's automobile market, amid a slowing economy and dipping consumer confidence.

Union Budget 2020 Expectation : The automobile industry is facing a protracted slowdown because of “overregulation”, and the upcoming Budget is unlikely to address its woes, Rajiv Bajaj, managing director of Bajaj Auto, said on Tuesday.

“In my view, the single most important reason responsible for the current state of affairs the industry finds itself in is overregulation. It’s overregulation that is killing the industry,” he said on the sidelines of an event in Mumbai, where the company revealed the prices of the e-Chetak.

Bookings for the company’s maiden offer in the electric segment, with prices starting from Rs 1 lakh, will open on Wednesday and deliveries will commence by the end of February from select KTM outlets in Bengaluru and Pune.

Bajaj had unveiled the scooter on October 16 in Delhi. The Chetak can run up to 95 km on a single charge when ridden in economy mode. A slew of regulations on safety, insurance, and emissions over the past one and a half years have made two wheelers (150cc and above in the mass segment) dearer by almost 30 per cent, hurting demand.

Bajaj’s remarks come against the backdrop of one of the most prolonged slowdowns plaguing India’s automobile market, amid a slowing economy and dipping consumer confidence. Passenger vehicle sales have been on a decline for the past six quarters, while two-wheeler sales have been skidding for four quarters. Sales of motorcycles and scooters fell 15 per cent in the December quarter.

“What purpose is served by making insurance mandatory for everyone? As if people can’t think for themselves. The government has to think on our behalf. We can’t make simple choices,” said Bajaj, alluding to the insurance regulator’s diktat in September 2018, which mandated an upfront payment of premium for five years for third-party liability.

Bajaj also questioned the need to make ABS (anti-lock braking system), a safety feature, mandatory for two-wheelers.

According to him, given the state of India’s roads and traffic congestion where one struggles to go beyond 20 kmph, imposing the ABS (on bikes that are 150cc and above), which increased prices by Rs 8000-10,000, made little sense.

Discover 100-cc launch was my biggest career blunder: Bajaj Auto MD Rajiv

He, however, sounded upbeat about the prospects of the KTM, an Austrian racing brand that the company had invested in 2007.

Bajaj Auto managing director Rajiv Bajaj on Thursday described the launch of the 100-cc variant of the commuter bike Discover as the "biggest blunder" of his career as it stunted the company at the No 2 position.

He noted that the Discover was a differentiating product when it was launched in 125-cc format, "offering mileage with a little fun," which was evident from the rising volumes.

However, Bajaj rued that the company is still the No. 2 player (in terms of bikes volumes) in the country because of the mistake it had made with the lower variant launch of the Discover and that things would have been different if it hadn't done so.

"Greed came in. Marketing people said if the 125-cc Discover sells so much then how many would a 100-cc Discover sell? We went ahead and made the 100-cc Discover. We lost our position and five years later we lost our performance too...

"We started off as a point of difference, with a different perception and a USP, but we ended up being a 'me too' product. Me too is bad in life and marketing," he said, speaking at an event in the city.

He, however, sounded upbeat about the prospects of the KTM, an Austrian racing brand that the company had invested in 2007.

He recalled that when Bajaj Auto invested in KTM in 2007, it was making only 65,000 motorcycles, and was still the second largest European motorcycle brand. On the other hand Harley Davidson was averaging 305,000.

But the not any longer as Harley has been declining since the is estimated to finish at 204,000 units this year, whiled KTM will finish with 207,000 units, he said.

Bajaj Auto is also planning to enter the e-vehicle space next year, even though he lamented that the industry has been given a step-motherly treatment to e-vehicles, by launching cheap variants.

"We could have made a Tesla on two-wheels or a Tesla on three-wheels and created different news.... we will try and do that in 2019 now," he said.

Business Standard