Pune, June 29: Declining market trends have finally forced two-wheeler giant Bajaj Auto Ltd to announce a five-day week at its scooter plant at Akurdi in Pune. This is the first time in the history of the company that the six-day week routine is being changed. The plant normally remains closed on Thursdays but now will have an additional lay-off on Friday.The company announced this decision on Wednesday stating that it was doing so to cope with the downtrend in the automobile market. Workers would receive half days wage on the lay-off day and this has not been well received by the workers union. Though the union had in the 1993 wage agreement agreed to the lay-off clause.
A company statement says, "This is a temporary measure as monsoons are a lean season for scooter sales. Further, the decision to implement uniform sales tax in the country has affected sales in the northern states, which is the primary market for Bajaj Auto, with customers postponing their purchase decision". Bajaj blames the fall in demand to the raise in sales tax from four to six per cent to 12 per cent.
The scooter industry witnessed a negative growth in May with Bajaj Auto's share slipping to a low of 38.17 per cent. Bajaj's scooter sales dipped 23 per cent. A statement issued by the company says the six-day week will be reverted to and full production will go on at Akurdi but gives no indication of when it is likely to happen. Bajaj's plants in Chakan and Aurangabad would continue to function normally, the statement adds.
According to industry observers, the future does look bleak for the scooter segment as the average two-wheeler lover prefers motorcycles. This explains why the mobike segment has been booming with players like Hero Honda, Bajaj Auto and TVS Suzuki having had a field run of late.
In the case of Bajaj Auto, the company has acknowledged that the Kawasaki branding has contributed to boosting sales of its motorcycles with the Caliber being the latest success story. This explains why the company is now considering hiving off its mobike division into a separate joint venture with the Japanese two-wheeler manufacturer. Indications are that Kawasaki would be content with a stake of up to 20 per cent and the objective of the exercise is to ensure the long-term commitment of the collaborator in its Indian operations.
The potential of the motor-cycle category in India can also be gauged by the fact that players like Honda of Japan have already announced plans to set up a wholly owned subsidiary here to make the latest range of vehicles.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.