I’m not sure that the news of Triumph partnering with Bajaj quite made the impact on the motorcycle industry that it deserves.
Maybe it is because we have seen Triumph misstep with smaller displacement machines in the past (with an Indian partner, no less), or perhaps it is because the press release penned by Triumph CEO Nick Bloor was utterly incomprehensible, and devoid of any concrete facts.
Either way, the news is worth spilling some more pixels over, because there is a bit at stake in the coming years for the motorcycle OEMs, and Triumph just made a bid for sizable land grab for it.
An Inconvenient Truth
Ok here’s the river, down and dirty: sales in the United States are suffering immensely, and Europe is just barely showing growth. The so-called “developed markets” are exactly that, developed.
The US and European motorcycle markets are like the once beat-down neighborhoods in now popular cities – the rich white 30-somethings have moved in, and jacked-up everyone’s rent. The growth boom is done, and now we are all living in the suburbs drinking lattes, wondering why everyone looks the same.
There is nothing wrong with that per se, it is just that the opportunities for brands like Triumph, which sells primarily large displacement motorcycles to affluent denizens of developed countries, are no longer easy to come by.
Continued growth in the United States and Europe, if that is even possible, is going to be hard-fought, and likely it will come at the expense of stealing customers from other brands, rather than by creating new two-wheeled enthusiasts and bringing them into the industry.
The motorcycle industry in the Western World is already cut-throat, and in the coming years, it is only going to get more competitive, unless a major change occurs in how this industry operates.
I can tell you from personal experience that “change” isn’t exactly something the motorcycle OEMs do well with, so…good luck on with that.
Travel East, My Son
So if the United States and Europe are where profit margins go to die, where does that leave the future of the motorcycle industry?
If you are reading this story, then surely you are an Asphalt & Rubber regular, and thus know that the future growth of the motorcycle industry is coming from The East.
India, China, Southeast Asia…heck, all of Asia…are the growth points for motorcycling. This might not be too surprising, since 60% of the world population lives on the Asian continent.
But, more importantly, these populations are starting to benefit from the industrial and technological renaissances that the western countries have already been through.
All of a sudden, truly billions of people are starting to enter a world where they have increasingly more consumer spending power, and demand higher standards of living.
As such, we are seeing strong demand for ways to move these 4.4 billion people from Point A to Point B. We are seeing these daily motorcycle riders becoming avid fans of two-wheeled motorsport. We are seeing these “emerging markets” becoming the economic powerhouses that put savvy motorcycle brands in the black on their annual balance sheets to investors.
The brands that choose to ignore the new map of the motorcycle industry do so at their peril, and Triumph knows this.
Shotgun Weddings Are Fun
Triumph knows that it needs to start developing motorcycles for the emerging markets around the world. Its current lineup does a nice job of appealing to the mercurial Western tastes, where motorcycles have more in common with wrist watches then they do as a form of meaningful transportation.
But for the other 82% of the world, a new approach must be taken. Small and mid-sized motorcycles are the people-movers of Asia, Africa, and South America – the continents that will drive the world economy over the next 100 years.
And while their tastes may change over time, the sheer physics of these population groups will dictate smarter and more efficient ways to move through a city. They will require motorcycles of all shapes and sizes, at all the various size and price points.
Triumph has already dipped its toe in the 250cc sport bike market though, only to find the water too cold. Much can be said about Triumph’s failed 250cc project. Late to the party, with the wrong dance partner, wearing the wrong dress…
The partnership between Triumph and TVS was a failed marriage before it even made its way down the aisle. But now, Triumph is trying its hand at love again – finding a willing partner in Bajaj Auto.
As one colleague put it, “Bajaj is becoming the Foxconn of motorcycling.” That is to say, Bajaj is the Eastern brand that Western brands are looking to when it comes to building and facilitating their expansion and entry into the growing Asian markets.
The reasons for this are many fold, but the biggest one might be that Bajaj is the one Eastern brand that is making strong moves to leave India, Asia, and The East. Bajaj wants a piece of the American and European pie, and that means it is willing to make a deal.
Carving the Turkey
Bajaj is perhaps more interesting to talk about than Triumph. The Indian firm owns a serious minority position in KTM, helping the Austrian marque build its sub-400cc motorcycles for both the Eastern and Western markets.
This might be why Triumph’s deal with Bajaj is rumored to be for motorcycles between 300cc and 600cc – side-stepping any overlap Bajaj has with KTM (and perhaps keeping Bajaj on the right side of any legal documents it might have with KTM).
The middleweight market though is going to be the growth center for Asia in the coming years though.
As these Eastern markets develop and mature, more affluent customers will be looking for bigger and better motorcycles, and early entry by Bajaj, with help from the Triumph name, could stake a claim on this soon-to-be lucrative position.
Swimming upstream too, Bajaj might be able to find a foothold in the Western markets as well, offering truly affordable entry-level machines American and European riders – something the established Western brands have failed miserably to achieve.
Meanwhile for Triumph, the British brand gets entry into India, and Asia as a whole.
Triumph also gets an entry-point machine that it can bring back to the American and European markets, creating a point of entry for young and new riders who are looking to spend considerably less cash than the $9,000 or so that it takes to get on a new Bonneville.
This plan dovetails nicely with Bajaj’s likely goals, and it might be the reason that we are not seeing any equity being exchanged between Triumph and Bajaj in their partnership. The opportunities that each brand creates for the other might just be worth the price of admission.
The Next, Next 10 Years
Affordable middleweight people-movers are the next battleground for the motorcycle industry. Brands like Triumph know that they have already lost the 250cc segments wars in the markets where it really matters.
Hero MotoCorp, Bajaj, Honda, and TVS have got the sub-250cc market wired in. Even KTM – arguably the most capable Western brand with its Bajaj ownership stake – is getting absolutely destroyed by the domestic brands in India and the rest of Asia, when you look at the sales figures.
But, those markets are changing, and their tastes are changing too. There is value in having a presence now in these emerging markets, because in the coming years it won’t be all about the sub-250cc category.
We are going to see a shift in riding tastes, with a focus on bikes between 250cc and 600cc in displacement.
With protective tariffs, Western brands will never be truly competitive in this space though, so the only way forward is to partner up. In this game of musical chairs, Triumph just made a strong grasp at an empty throne. It will be interesting to see if they can make good on the opportunity ahead of them.
Similarly for Bajaj, we should all keep an eye on this name. In the next, next 10 years, I suspect we won’t be talking about them like they it is an obscure Indian brand.
We will be talking about them like they are the next Honda…because they will be.
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