Bajaj Auto to hike bike prices from January

Our Corporate Bureau
14 December 2006

Mumbai: Bajaj Auto Ltd, the country's second-biggest bike maker, will raise prices by Rs 500 across their product range, except for the Pulsar, beginning January 2007.

"We will be increasing the price of bikes by Rs 500 from next month, though the Pulsar will be spared from the upward revision," a company official said.

Stiff competition and rising input and freight costs had put margins of most auto companies, especially two-wheeler makers, under severe pressure.

Operating margin as a percentage of net sales of Bajaj declined to 14.83 per cent in the second quarter of this fiscal from 16.9 per cent in the first quarter. Lucrative discounts in the third quarter saw margins of auto companies further compressed as they scrambled to garner higher numbers in the busy season sales.

The race between Bajaj Auto and Hero Honda for market-share is eating into margins of both companies and Bajaj is betting on new products in the coming years.

"The 100cc, 4-four stroke bikes are as outdated now as the 150cc, 2-stroke scooters were in the '90s so there's no reason why they shouldn't share the same fate," earlier reports quoted Bajaj Auto MD Rajiv Bajaj as saying.