Goodbye to Bajaj Scooters

One of my fondest memories of visiting India as a child, was that of jumping on my cousin’s Bajaj scooter and going for a spin. That scooter was his pride & joy, just as much as the fridge freezer was my aunt’s – both items spoke volumes in their neighbourhood about their social status… just as owning a Chelsea tractor or a private education does in mine today.

Given the near iconic status of the scooter in India, I was surprised to learn that Bajaj are going to stop manufacturing it. You can read all about it here, as there’s been acres of coverage in India about this decision:

Apart from getting nostalgic about the demise of the scooter, what I wanted to comment about, more than anything else, was the manner in which one of India’s most prominent firms is handling this. In one corner is Rahul Bajaj, Chairman & father of the Chief Executive, Rajiv Bajaj who disagree with the decision to stop making scooters.

Bajaj Snr is an outspoken guy who enjoys roughing people up. He’s known for lashing out by speaking his mind but I didn’t think he would dish out the same treatment to his own son on prime-time TV. Rajiv Bajaj came across very impressive and said all the right things, whereas his father looked exactly the opposite.

The take home for me from this episode is as follows:

1. With India’s increasing affluence, consumer tastes are shifting… resulting in people wanting better products and services, like motorbikes instead of scooters. Just as Bajaj exits an important product line, others do exist and will take the opportunity to innovate.

2. What Rajiv Bajaj is saying is that he can’t add any more to this business, with profits declining, he believes the greater opportunity lies in motorcycles. He added that the day he figures out how he can add value to an overcrowded market sector he’ll re-enter the scooters sector.

3. We often hear about owner / promoter types of businesses being wedded to their original concept, here we see the future – a family firm that is in disagreement but decides that logic trumps emotion. Also, that the governance and leadership in India’s firms isn’t as bad as what others believe. Rahul Bajaj should be congratulated for playing the role of Chairman to the tee by questioning whether this decision benefits its shareholders.

Whether he needs to do so in such a public manner is a matter for debate. I, for one, may miss my cousin’s Bajaj scooter but you can’t really fault the firm for the decision its arrived at. All in all, for me it demonstrates how mature and responsible Bajaj is as a company.

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