There is little similarity in the products of the two companies, but they have joined hands to jointly develop scooters and motorcycles. In fact, Bajaj has gone ahead and bought 21 per cent equity in KTM. The Australian company's chief executive officer Stefan Pierer, on a recent visit to India, shared coffee and cookies with Suveen K Sinha and Surajeet Das Gupta. He also shared details of the joint development programme with Bajaj and gave his own take on the never-ending India-China comparison. However, since Bajaj has announced its plans to make a small car, the first question had to be:
Why do we see so many two-wheeler makers planning to make cars?
All motorcycle makers are moving in the direction of manufacturing small cars. It is a logical step to take. Everyone appears to be realising that the middle class, which is the main consuming population for motorcycles, is no longer content with it. They want more than a normal motorcycle. So the options are to make more and more high-end motorcycles and maybe make small cars.
Why did you pick Bajaj as a partner?
Indian manufacturers are very experienced in producing vehicles at price levels that are very competitive. Not only that, they are also accustomed to meeting stiff norms. For example, India is among countries that have the toughest emission regulations. When it comes to motorcycles, your emission norms are tougher than the norms in Europe.
Apart from that, Indian companies do all this at low cost. The price is very competitive in India. So there is high efficiency of consumption and high emission standards.
How is KTM doing?
KTM as a company is known for high performance. It is a high-performance brand. In that segment, it is the second largest manufacturer in Europe. Europe accounts for two-thirds of our total market. Incidentally, in the US, we are ahead of BMW, which is also known for its high-end motorcycles.
If you were looking for low-cost manufacturing, you could go to a Chinese company.
Bajaj is a strong player in India. In recent times, it has also become strong in the Middle East (east Asia). Things in India are different from the way things are in China. We had a lot of problems with Chinese products. You are right, China is all about low-cost manufacturing. You cannot imagine how cheap they are. They sell through all sorts of channels and compromise on the safety standards.
However, the idea is not to dismiss them. Sooner or later, they will become competition for us. The interesting thing is that the Japanese are using the Chinese and Taiwanese infrastructure perfectly. We all talk about the invasion of Chinese goods. But the Japanese are the real winner of the Chinese invasion.
China has always been short-term-oriented. That mentality is very different from India's. India as a country is long-term-oriented. Apart from that, you can never trust the Chinese people. That is a problem. It is a face-to-face business. If you trust each other, you can do difficult things. You can also do ambitious things.
What exactly do you plan to do with Bajaj?
We are talking about how we can provide what we call in Europe, urban mobility. We are looking to undertake joint development of scooters and three-wheelers with Bajaj. There is one more thing. Electric cars have a bright future and we are looking at it.
How will you divide the work between Bajaj and yourself?
We are analysing if it is possible to use that scooter concept, the one we are developing for Europe, in India. The entry and middle segments can be handled by Bajaj while KTM can take care of the high-end segment.
So in the first phase, so to say, what can we expect from the KTM-Bajaj combine in the Indian market?
We are going to joint produce a 125 cc scooter in India. The two teams have already made the layout. It will be powered by a twin cam four-stroke engine. It is a 2010 model, which we started developing in July 2007. There will be the option to increase the size of the engine to 180cc. This platform is a base for many other platforms. All our new platforms will try to combine the two critical virtues of performance and efficiency. We have the expertise. Our products are really high-end, while Bajaj does a great job on the parameter of efficiency.
