Bajaj Auto, TVS chip away at China's share in African two-wheeler market

Bajaj Auto is the No. 1 or 2 in more than a dozen African markets, with a cumulative market share of 40% of the 2.4-2.7 million two-wheelers sold there.

Amid the border tensions between India and China in Ladakh, a pitched battle is being waged between two Indian companies and their Chinese rivals in faraway Africa. In this battle for market share, the Indians have gained ground at the expense of the Chinese companies.

India’s Bajaj Auto and TVS Motor are quickly capturing the two-wheeler market share in the African continent. Such has been the rise of the Indian brands that the number of Chinese companies present in the African market has come down from more than 200 a decade back to less than 40 now. If the Chinese held as much as 95-100% of the market a decade ago, now they share it almost equally with the Indian manufacturers.

Bajaj Auto is the No. 1 or 2 in more than a dozen African markets, with a cumulative market share of 40% of the 2.4-2.7 million two-wheelers sold there. It sold more than a million vehicles in Africa in the fiscal year ended in March 2020, recording a compounded annual growth rate of 30% in the last three years.

“Bajaj has been able to compete and win in Africa based on its product strengths, local assembly operations … quality assurance, network of distribution partners, dealers and service centres,” executive director Rakesh Sharma said. “With a long-term focus, a huge effort has been put in training tens of thousands of mechanics and establishing customer engagement programmes, which is yielding results,” added Sharma.

TVS didn’t provide specific numbers for Africa, but a spokesperson said the continent offered structural growth opportunities due to rising demand for last-mile connectivity in rural and semi-urban areas.

Called Boda Boda, two-wheelers in Africa are largely used for commercial purpose — for transporting both people and goods. The Indian brands are well-placed to take advantage if demand for personal mobility increases in the wake of the Covid-19 pandemic.

Bajaj’s Boxer bike has become a ubiquitous brand in Africa and has helped the company grow share from 25% five years ago to 40% in 2019-20. The brand’s nearest competitor sells less than half of the Boxer volume. Bajaj Auto has over 10 assembly facility in Africa and it works with a dozen distributors.

India’s exports of two-wheelers grew 13.4% annually in value between 2008 and 2019, compared with 6.4% for China’s companies, according to Kotak Institutional Equities. In fiscal 2019, two-wheeler exports earned India about $2 billion in foreign exchange, according to its report.

“Indian companies are capturing the market as they bring quality and durability vis-à-vis competition,” the TVS spokesperson said. “TVS has built customised products for the African market as each region has a distinguished requirement; two-wheelers have a multi-purpose usage ranging across ambulance, taxi, and commuter vehicle backed up by a holistic sales network to provide end-to-end support.”

Much like Bajaj, TVS too has focused its attention on setting up assembly plants and stitching together strong local partnerships.

For African customers Indian products are aspirational in terms of positioning pricing and quality, Frost & Sullivan associate director Aswin Kumar said. The biggest factor for Indian companies is their strong partnership with local distributors which has enabled them to have a complete set-up unlike the Chinese.

“Africans have used Chinese products, but the word of mouth from boda boda riders about robustness of Indian products coupled with very strong distributors on the ground with financial muscle is making them win more customers,” added Kumar.

As many as 36 Chinese brands operate in Africa, but only a few have pan-African presence.

Exports have helped Bajaj and TVS reduce the risk from the Indian market where sales have fallen last year. For Bajaj, international markets accounted for 47% of the total volume in fiscal 2020. At TVS, the share of exports rose to 26.13% from 11.6% ten years earlier.