Bajaj's Market Expansion: CNG Portfolio To Expand

Published: Sunday, July 21, 2024, 9:00 [IST]

Bajaj Auto Ltd recently introduced the world's first two-wheeler powered by compressed natural gas (CNG). The company plans to develop a range of CNG motorcycles under the Freedom brand, targeting various segments.

The three variants of the Freedom 125cc motorcycle were designed on a platform that can be adapted for both higher and lower-powered CNG models in the future.

Expanding Market Share in the 100-125cc Segment

The company sees significant potential in the 100-125cc segment, where it currently holds about 15% market share.

Bajaj Auto aims to disrupt this entry-level and commuter segment, which has been dominated by Hero MotoCorp. With the Freedom brand, Bajaj hopes to attract mileage-conscious consumers with an affordable solution.

Bajaj Auto launched the Freedom 125 on July 5, priced between Rs 95,000 and Rs 1.10 lakh. Deliveries have commenced, initially focusing on Maharashtra and Gujarat before expanding to other markets. The model has already received over 4,200 bookings, with customers from these two states accounting for 80-90% of the total.

Production and Market Potential

Currently, Bajaj Auto can produce 20,000 units of the Freedom 125 per month and plans to increase this capacity to 40,000 units per month by the last quarter of this financial year. The management noted that the model has an addressable market of up to 5 lakh units per month.

"Of about 1 million motorcycles sold per month in India, almost 75% are in the 100-125 cc segments. And about 60% of these customers have access to CNG dispensing stations. Hence the addressable market is around 450,000-500,000 per month. We are targeting all these customers with the proposition of fuel economy, style and comfort," Sharma said.

Environmental Benefits and Cost Savings

The Freedom 125 boasts significant benefits over petrol motorcycles. It offers up to 50% savings in operating costs and emits 26.7% less CO2 compared to similar petrol models. This makes it an attractive option for environmentally conscious consumers looking for cost-effective transportation solutions.

The success of Freedom will largely depend on CNG availability across states. "A key factor for the success of Freedom 125 will be the ease of CNG availability. We are hoping that the CNG distribution company will also take this opportunity to expand its business and facilitate the migration from petrol to CNG. This will help pump the rate of adoption," Sharma added.

Future Prospects and Government Initiatives

There are around 7,000 CNG dispensing stations across major states in India, with Gujarat, Uttar Pradesh, and Maharashtra leading in numbers. The government aims to increase this number to approximately 17,500 by the end of this decade.

"This is a platform that is extendable in both directions. But exactly when we are going to introduce it, we will see. It is not ground-up work that will be required; it is a platform. And very quickly we can respond if there is a requirement emerging in the market," Sharma said.

Bajaj Auto's strong presence in segments above 150cc positions it well as it ventures into new markets with its innovative CNG motorcycles under the Freedom brand.