December 1, 2008 / 11:53 AM / 10 years ago

India's Bajaj to launch new bike a month from Jan

MUMBAI, Dec 1 (Reuters) - Bajaj Auto Ltd (BAJA.BO), India’s second-biggest motorcycle maker, said on Monday it would a launch new model a month from January for six months to revive sales that fell 37 percent in November.

High interest rates and sluggish consumer spending have dented 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.

To beat the slowdown, group firm Bajaj Auto Finance Ltd (BJFN.BO) is offering a retail finance scheme to buy Bajaj’s vehicles at an interest rate of just under 8 percent, Bajaj Auto Ltd said in a statement.

This is expected “to revive sales in the short term,” it said.

Bajaj said 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 dwindling 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.

“Spending on new products will put pressure on margins,” said Prayesh Jain, research analyst with India Infoline.

The products would do well only if they were different from its existing motorcycles and targeted at a new category, he added.

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.

“We are not bullish on the company,” he said.

The country’s top motorbike maker, Hero Honda Motors Ltd HROH.BO, posted a 0.5 percent rise in November sales, while third-largest TVS Motor Co’s (TVSM.BO) sales fell 12.7 percent.

Shares in Bajaj Auto, with a market value of $951.7 million, closed down 4.3 percent at 306.95 rupees. The stock has shed 49 percent since its re-listing in May this year, compared with the main BSE index .BSESN that has lost 47 percent in the same period. (Reporting by Janaki Krishnan; Editing by Ranjit Gangadharan)

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