Mo­de­nas plots way up through part­ner­ships

Tie-up with In­dia’s BAL another step in re­gain­ing lost ground

The Star Malaysia - StarBiz - - Companies & Strategies - By JOY LEE joylmy@thes­tar.com.my

COL­LAB­O­RA­TIONS are the way of the fu­ture. Man­u­fac­tur­ers are in­creas­ingly go­ing into part­ner­ships to share re­sources and en­ter new mar­kets to ex­pand their reach.

And af­ter be­ing in the dol­drums for some years, Mo­to­sikal Dan En­jin Na­sional Sdn Bhd (Mo­de­nas), a unit of DRB-Hi­com Bhd, has also opted to work with oth­ers as it revs up for a sec­ond ride.

No­tably, a part­ner­ship is the quick­est way for Mo­de­nas to push new prod­ucts to the mar­ket with­out hav­ing to in­vest time and money into de­vel­op­ing its own mo­tor­cy­cles from scratch.

“Mo­de­nas is on a jour­ney to carry it­self up af­ter be­ing down for some time.

“We have a lot of plans to en­sure that the Mo­de­nas brand rises over a short time through strate­gic part­ner­ships,” Mo­de­nas chief ex­ec­u­tive of­fi­cer Amirudin Abd Kadir told the me­dia dur­ing a re­cent fa­mil­iari­sa­tion trip to Ba­jaj Auto Ltd’s (BAL) Chakan fa­cil­ity in Pune, In­dia.

Ear­lier this year, Mo­de­nas teamed up with BAL to re­cap­ture the do­mes­tic mo­tor­cy­cle mar­ket.

The tie-up with BAL comes hot on the heels of a suc­cess­ful ven­ture with Tai­wanese scooter brand Kymco last year.

What’s dif­fer­ent about its tie-up with BAL, though, is that it al­lows Mo­de­nas to en­ter a new seg­ment in the mo­tor­cy­cle mar­ket.

Pre­vi­ously known for its scoot­ers and kapchais, Mo­de­nas has brought in three of Ba­jaj’s mod­els, namely the V15, Pul­sar NS 200 and Pul­sar RS 200 for the street bike seg­ment.

Mo­de­nas will also be bring­ing in Ba­jaj’s Dom­i­nar 400 early next year and pos­si­bly the Boxer mo­tor­cy­cles.

BAL’s dif­fer­ent ap­proach to ad­ver­tis­ing and pro­mo­tions as well as its strong en­gage­ment with deal­ers and cus­tomers has al­ready gar­nered the Pul­sar a 35% share in Malaysia’s 150-500cc sports mo­tor­cy­cle seg­ment as at Septem­ber.

“For all three mod­els, we have sold close to 2,000 units to-date. Our ini­tial plan was to bring in 6,000 next year.

“But with the re­cent de­vel­op­ment and mar­ket feed­back, we are tar­get­ing to do bet­ter than what we have tar­geted. We hope the trend con­tin­ues,” says Amirudin.

Gain­ing mar­ket share

This de­vel­op­ment cer­tainly bodes well for Mo­de­nas in its ven­ture to gain sig­nif­i­cant mar­ket share in the years to come.

In FY2017 ended March 31, Mo­de­nas achieved sales of 39,725, mak­ing up 8% of the mar­ket.

The two-wheeler man­u­fac­turer noted that the mo­tor­cy­cle mar­ket shrank by 0.1% to 465,168 units in 2016 from 465,483 units a year ear­lier.

Amirudin says Mo­de­nas has al­lo­cated a capex of RM4mil over the next two years to in­crease the vis­i­bil­ity for its prod­ucts in the mar­ket.

He adds that Mo­de­nas will be able to tap BAL’s strength to im­prove its man­u­fac­tur­ing and tech­nol­ogy ca­pa­bil­i­ties.

BAL has a strong track record in the twoand three-wheel­ers mar­ket, be­ing among the top pro­duc­ers in the world.

The In­dian man­u­fac­turer pro­duces about five mil­lion ve­hi­cles a year and turns in an an­nual rev­enue of more than US$3bil.

It has three man­u­fac­tur­ing plants, all lo­cated in In­dia.

Its 109-acre Chakan plant, the most ad­vanced of the three, boasts slick and ad­vanced as­sem­bly lines styled af­ter best prac­tices by Ja­panese man­u­fac­tur­ers.

It is ded­i­cated to the pro­duc­tion of high per­for­mance bikes, man­u­fac­tur­ing some 100,000 ve­hi­cles a month, and em­ploys 1,500 peo­ple.

But even the gi­ant man­u­fac­turer un­der­stands the need to col­lab­o­rate with oth­ers to ex­pand.

“These al­liances which we have put in place are ac­tu­ally an ac­knowl­edge­ment that the world is com­plex.

“And there is no sin­gle com­pany which we feel can ar­rest the cus­tomer and be prof­itable in a mean­ing­ful way across the board and across all seg­ments.

“What we are tak­ing on, is the chal­lenge of reach­ing out to as many as cus­tomers of Salient points mo­tor­cy­cles as pos­si­ble span­ning the global and span­ning the dif­fer­ent seg­ments.

“We can’t do it all by our­selves. And there­fore, we are en­ter­ing strate­gic al­liances with like-minded peo­ple who have got the same ob­jec­tives.

“There is an op­por­tu­nity all across the board and in that space, we see how best to make the most of that op­por­tu­nity.

“That, we be­lieve, is to be done through man­age­ment of strate­gic al­liances,” says BAL pres­i­dent of in­ter­na­tional busi­ness Rakesh Sharma.

Rakesh is keen to ex­pand BAL’s foot­print in Asean and has ex­pressed in­ter­est to tap into Mo­de­nas’ op­er­a­tions as a hub to serve the re­gional mar­ket.

Cur­rently, 45% of BAL’s pro­duc­tion caters to the ex­port mar­ket, of which Asean makes up 6%.

Mo­de­nas’ plant in Gu­run is only run­ning at about 50% of its ca­pac­ity at the mo­ment. At full ca­pac­ity, the plant could po­ten­tially rake in an­nual rev­enue of RM600mil.

Ad­di­tion­ally, Mo­de­nas will be able to ride on BAL’s ex­pan­sion in Asean.

The tie-up would also en­able Mo­de­nas to tap on BAL’s strong R&D ca­pa­bil­ity as the au­to­mo­tive in­dus­try evolves with the changes in tech­nol­ogy.

Note that most carmakers are al­ready look­ing at pro­duc­ing elec­tric ve­hi­cles and Rakesh says this trend, along with the emer­gence of tech-based com­pa­nies, will even­tu­ally have se­ri­ous im­pli­ca­tions on the two-wheeler mar­ket.

“This is an area that has to be mon­i­tored very closely. I think there will be false starts.

“But it is still im­por­tant to be en­gaged in a broad spec­trum where these changes take place and be pre­pared to ex­pe­ri­ence the pain of a false start to learn from the process.

“And as (the in­dus­try) finds its equi­lib­rium and di­rec­tion, we will par­tic­i­pate in that di­rec­tion.

“We our­selves have been through so many changes.

“Our be­lief is, we will watch these things very closely and make our R&D sen­si­tive to them, and con­tinue to in­vest in the back­end and the tech­nolo­gies,” says Rakesh.

He adds that BAL’s high profit mar­gin of about 20% and solid cash re­serves will al­low the com­pany to con­tinue in­vest­ing in R&D.

This will in­deed help Mo­de­nas as it charts new growth ar­eas.

Amirudin re­it­er­ates that its col­lab­o­ra­tions with global brands such as Ba­jaj and Kymco will be key to Mo­de­nas’ ex­pan­sion.

One would be hard-pressed to make it on their own, notes Amirudin, par­tic­u­larly with to­day’s ris­ing costs and com­pe­ti­tion.

With its col­lab­o­ra­tions and plans in place, Mo­de­nas is eye­ing the top po­si­tion in the lo­cal mo­tor­cy­cle mar­ket by 2020.

Ex­pand­ing foot­print: Rakesh is keen to ex­pand BAL’s foot­print in Asean and has ex­pressed in­ter­est to tap into Mo­de­nas’ op­er­a­tions as a hub to serve the re­gional mar­ket.

Mo­tor­bike hub: Ba­jaj Auto pro­duces about five mil­lion ve­hi­cles a year and turns in an an­nual rev­enue of more than US$3bil.

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