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Bajaj plans European scooter tie-up

India's largest scooter maker Bajaj Auto Ltd plans to exploit Europe's passion for ungeared scooters by launching models there through a tie-up with an auto giant, a senior executive said.

Bajaj is talking to leading European companies to source technology for the proposed models, president Rajiv Bajaj said.

"Europe is seeing a big boom in demand for ungeared scooters. We want to exploit this opportunity," he said. "We are looking for a niche player with good technology, who can complement us."

Ungeared scooters are smaller and easier to ride than motorcycles. They typically have an engine size around 100 cc.

Europeans purchased around one million ungeared scooters last year and the market is growing around 20 percent a year, Bajaj said. The global market is around three million vehicles.

The Bajaj family and associates own 46.5 per cent of the company's shares, which were last traded at Rs 230 each at 0947 GMT, up 0.5 per cent compared with a 1.39 per cent decline in the Sensex.

Rajiv Bajaj is the eldest son of company chairman Rahul Bajaj.

He declined to identify any potential partners, but if a deal was worked out, the India company would take care of the production and the partner would handle marketing and sales.

Bajaj said his company's low-cost production base for scooters would help any foreign partner who has technological skills but who lacked cost advantages.

A new company is not being considered at this stage.

European market

Bajaj's move comes when it is struggling to stabilise its domestic market share for geared and ungeared scooters because of consumer preferences for motorcycles.

Geared scooter sales last year fell 36 per cent to 435,699 while sales of ungeared scooters dropped 6 per cent to 75,596 units, the company's annual report showed.

Bajaj said the company's existing tie up with Japan's Kawasaki Heavy Industries would be a good model to use as the basis of a partnership for the European market.

Bajaj and Kawasaki have had an agreement since 1995-96 under which the Indian company sources technology from the Japanese giant to build and sell motorcycles in India.

Kawasaki is also proposing to source vehicles for its other markets from Bajaj's plant.

"Only in India is Kawasaki the No 2 player in motorcycles. Everywhere else, they are No 3 or No 4," Bajaj said.

Bajaj sold 422,016 motorcycles in India in the year ended March 2001, up from less than 90,000 in 1995-96, according to its latest annual report. Hero Honda Motors Ltd sold more than a million last year.

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