The Bajaj Auto and KTM Collaboration Story and Result

Over 13 years ago, Bajaj Auto, a beloved two-wheeler producer in India, obtained a share in KTM, resulting in one of the most prosperous partnerships in the country's motorcycle sector. 

Throughout the years, the two companies have introduced exceptional motorcycles and achieved remarkable expansion. 

This article will delve into how their alliance has led to improvement and explore the recent media attention surrounding the companies.

KTM and Bajaj Auto Partnership

In 2007, Bajaj Auto acquired a 14.5% stake in KTM AG, an Austrian company, as part of its goal to democratize motorcycle racing in India and expand its reach to developed markets like Europe, Canada, Australia, and Japan. 

Bajaj Auto believed that teaming up with an experienced motorcycle manufacturer like KTM would help them achieve their objectives.

At the same time, KTM was experiencing financial difficulties due to its high debt, and Bajaj Auto stepped in to provide the necessary support to keep the company on track to becoming Europe's largest motorcycle producer. KTM also recognized the potential of its products in the emerging Indian market.

Pierer Industrie AG, an Austrian industrial investment group, and Bajaj Auto Limited now jointly own KTM AG. As of March 2020, Bajaj Auto, through its Netherlands subsidiary, has invested a total of Rs 1,219 crore and holds a 48% stake in KTM.

Result of Their Partnership

KTM's entry into the Indian market introduced a novel category of bikes that had never been seen before in the country. In 2012, the company introduced the KTM Duke 200, which quickly gained immense popularity among Indians for its affordable pricing and exceptional performance. 

Bajaj Auto played a vital role in facilitating KTM's entry into the market. The success of the Duke 200 led to the launch of the Duke 390, as well as the RC 200 and RC 390 models.

Bajaj Auto's Pune facility is where KTM's bikes are produced, which has been a significant factor in keeping costs low in India. This cost advantage has made KTM's premium bikes more accessible to customers worldwide at a more reasonable price and has also supported the Indian Government's 'Make in India' campaign. 

As a result of their strategic alliance, Bajaj has gained access to KTM's advanced technology, which has enabled them to develop high-performance motorcycles such as the Pulsar NS200, RS200, and Dominar 400. 

It's worth noting that the engines used in these models are identical to those used in KTM's motorcycles. Additionally, the recently introduced Dominar 250 uses the same engine as the Duke 250.

Bajaj Auto's R&D team collaborates with KTM's engineers to develop faster and better motorcycles. This partnership has enabled both companies to introduce numerous models in both domestic and international markets.

Additionally, it has allowed Bajaj Auto to realize its objective of expanding into advanced markets like the United States, Canada, Japan, Australia, and others.

Yearly Sales Figures of KTM Bajaj Auto

Since the inception of KTM's Indian operations in 2012, the collaboration between the two companies has yielded significant benefits through synergy. The demand for Bajaj and KTM motorcycles has risen dramatically over the years, and the companies have responded by offering a diverse selection of models to Indian consumers. 

Interestingly, in FY20, the proportionate profit from KTM to Bajaj Auto was €40.6 million (Rs 322 crore), which is slightly lower than the €43.1 million (Rs 350 crore) in the previous year. 

Furthermore, Bajaj received dividends from KTM AG totalling Rs 109 crore during the previous financial year, which has contributed significantly to Bajaj's overall performance in FY20.

In FY20, KTM sold over 64,000 units in India, achieving a 26% YoY growth. India has emerged as a critical market for KTM's range of motorcycles, with 125cc, 200cc, 250cc, and 373cc models being exported to various countries. Consequently, KTM has become one of the fastest-growing motorcycle brands in India. 

Bajaj Auto, on the other hand, exports KTM models to over 80 countries worldwide. After establishing a foothold in India, KTM has managed to increase its sales and market share globally as well.

Recent Developments and Changes in the Collaboration

Bajaj Auto Ltd has initiated preliminary discussions with its Australian partner, Pierer Industrie AG, to simplify its shareholding structure in KTM. Currently, Pierer Mobility AG (PMAG) and Bajaj Auto's Netherlands subsidiary (Bajaj Auto International Holdings BV) hold 51.7% and 48%, respectively, in KTM AG. Pierer Industrie is the parent company of PMAG and holds a 60% stake in the company.

Under the proposed transaction, Bajaj Auto will exchange its 48% stake in KTM AG for a stake in PMAG. Subsequently, both Pierer Industrie and Bajaj will transfer their PMAG stakes to a new holding company. This move would enable Bajaj to play an active role in future KTM product planning, particularly India-specific KTM products.

Additionally, Bajaj and KTM are collaborating to develop and manufacture electric bikes for the Indian market. Soon, we could witness their high-performance electric motorcycles entering the market.

Conclusion

This partnership serves as a prime example of successful collaboration between two forward-thinking companies. Together, they have consistently introduced high-performance motorcycles at an affordable price point for Indian consumers. 

Over the course of 13 years, they have managed to capture a significant market share in the two-wheeler industry.

Their technical expertise and manufacturing capabilities have been instrumental in their global growth. This type of expansion is indeed rare. However, the question remains as to whether they will be able to maintain their impressive track record and continue to garner the same level of popularity among bike enthusiasts worldwide.