 Bajaj Auto Ltd, the second-biggest motorcycle maker of India has announced on Monday that it would a launch new model a month from January for six months to revive sales that fell 37 per cent in November.
High interest rates and sluggish consumer spending have spoiled demand for automobiles in India, including for motorcycles and scooters that Bajaj Auto produces and analysts said the costs of new launches could squeeze the company`s profit margins.
In a statement, the automaker company said that Bajaj Auto Finance Ltd is offering a retail finance scheme to buy Bajaj`s vehicles at an interest rate of just under 8 percent to beat the slowdown.
Bajaj said that motorcycle and scooter sales dropped 37 percent in November to 132,421 units from a year earlier. All vehicles, including three-wheeled motorised rickshaws that rose 13 percent, were down 32 percent at 159,747 units.
The declining sales are expected to continue in December as dealers also cut back purchases to avoid piling up inventories, the company said.
Bajaj said it would launch a new motorcycle every month from January to attract buyers. Prayesh Jain, research analyst with India Infoline, said, "Spending on new products will put pressure on margins."
He added that the products would do well only if they were different from its existing motorcycles and targeted at a new category. Bajaj`s motorcycles, with engine capacities of more than 125cc, cater largely to the urban segment that has been severely hit by the credit crunch and rise in interest rates, he said.
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Posted On : 02 Dec 08
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