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A fresh round of price war in the low-end motorcycle segment may well be on the cards. Bajaj Auto (BAL) on Monday lowered the price of its 100-cc Bajaj Platina by Rs 3,000, taking advantage of the tax sops for its new plant at Pantnagar (Uttarakhand). Bajaj Platina will now be available at Rs 33,000 (ex-showroom).

Bajaj has already indicated that it would gradually exit from the 100 cc segment due to lower margins. With Monday’s price cut, it would be taking rival Hero Honda head on.

By July, the company plans to roll out a new motorcycle in the executive category, priced around Rs 40,000, said Rajiv Bajaj, managing director, BAL. He said the company would go all out to move customers from the 100-cc segment to a new segment.

The company on Monday inaugurated its Uttarakhand plant with a capacity to manufacture one-million bikes. The unit has been set up at an investment of Rs 700 crore, of which Rs 550 crore were invested by its vendors. Platina will be the first off this plant. “This plant is a global model, which we plan to replicate overseas,” said Mr Bajaj.
Bajaj’s Pant Nagar plant, built on 30 acres, out of the 65 acres owned by the company, has a planned capacity of one million motorcycles, which can be expanded to three million. The company has directly invested only Rs 150 crore in this plant, translating into an investment of a mere Rs 1,500 per vehicle.

The plant will be supported by 16 auto component vendors who have set up dedicated facilities around the plant. As part of a pioneering manufacturer-vendor partnership, a part of the land allocated to Bajaj has been taken up by the vendors to set up facilities.

This partnership will see manufacturing and supply of key components, including speedometers from Pricol, front fork and suspension from Endurance, lighting systems from Lumax, plastic and electrical components from Varroc, control switches and ignition systems from the Minda group and frames from JBM.