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The Rediff Business Interview/Arun Firodia

'Cheap second hand cars won't affect the two-wheeler market'

Arun Firodia, chairman, Kinetic Engineering Limited, has followed the Bajaj Auto footsteps into the motorycyle market this year. Kinetic, in collaboration with Japanese major Honda Motors, had revolutionised the two-wheeler market with the launch of the first non-geared, electric-start scooter Kinetic Honda. Kinetic is also among the first companies to enter the market of two-wheelers running on alternative fuel. The company launched its Kinetic Electric at the Auto Expo 2000 which runs on battery.

Now, in a fresh technical tie-up with Hyosung, it has launched two motorbikes -- GF 125 and GF 250 -- to enter the top geared motorcylce market. In this interview with Neena Haridas, Firodia shares his vision about where the company and the industry are headed in the new millennium.

You have followed Bajaj Auto into the mobike market. What is the strategy behind scooter companies such as yours entering the motorcycle market?

As far as our company's strategy is concerned, we want to have a presence in the entire two-wheeler market. We had always wanted to enter this market, but under the contract between Kinetic and Honda, we were not allowed to make mobikes. Now that we have bought out the stake from Honda, this clause obviously stands nullified, and we decided to go into the mobike market. We have entered into a technical tie-up with the Rs 96 billion Japanese company Hyosung Motors for making motorcycles.

The reason is simple: the market is growing and we want to be there when the big ride begins.

Is this decision a reaction to the fact that the two-wheeler market is increasingly becoming one of motorcyles alone at the cost of scooters?

It is only partly true that the market is shifting in favour of motorcycles at the cost of scooters. Yes, there is a shift but from geared scooters to non-geared ones. The motorcycle market is also growing. Now, we are already established in the non-geared scooters, especially because of the success of Kinetic. Besides, we have launched a couple of new modern scooters, as we call them, such as Marvel.

You have priced the motorbikes at around Rs 50,000 -- thus targeting the high-end market. Why is that the two-wheeler manufacturers are focusing on high-end motorbikes? For instance, your competitor Bajaj too has launched the Rs 65,000 CBZ and plans another Rs 75,000 bike?

First of all, we are not that highly priced. Some of the products are meant to be in the market as image booster -- they are not intended at mass market to generate volumes. They are value builders, not volume generators.

In any case, if the inflation rate is taken into consideration, I don’t think the prices are increasing at that fast a pace -- instead I think the prices are being maintained in relative comparison with inflation.

Now that you have made a foray into mobikes, will you shift focus from scooters to this area?

In three years, we intend to have both scooters and mobikes contributing equally to the total turnover which is being targetted at Rs 20 billion.

However, in the first year, we are targeting 50,000 unit sales of the two bikes which will be doubled to 100,000 and 200,000 in the coming two years, respectively. As for scooters and scooterettes, we are targeting sales of 250,000 units in a year whereas step-throughs and mopeds will be around 150,000.

According to auto experts, battery-run vehicles have low-pick-up and are cumbersome to get recharged. Now how do you intend to sell the idea of an electric scooter?

It is a concept that needs to be sold. Consumers are already aware of the pollution problems, now if you give them a solution, I think they will buy it. Our electric scooters have been priced at Rs 30,000 and the battery will be leased out to the consumer who will need to recharge it every 60 kms. Now, this is obviously not meant for long-drives. It is meant as a eco-friendly vehicle which can be used by consumers to take the children to school or bus-stops or for short shopping trips. We are hoping to sell about 12,000 units this year.

Now that second-hand cars are becoming cheaper by the day, do you think the market of two-wheelers will be adversely affected?

No, not at all. There will always be a market for two-wheelers. In fact, I think it will be a co-existence. People will start using eco-friendly two-wheelers for short trips and use the cars for long family drives.

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