The World is Not Enough – Bajaj Wants to Create a Three-Way Alliance with KTM & Kawasaki

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According to Indian publication Bike Advice, Bajaj is looking to cultivate its relationships with KTM & Kawasaki further, hoping to create a three-way alliance that would build off the strengths of each company. Since 1986 Bajaj has had technical ties to Japanese manufacturer Kawasaki, with Bajaj paying royalties to Kawasaki for basing its creations off Kawasaki designs. Bajaj and Kawasaki also share distribution channels, with Bajaj motorcycles being sold at Kawasaki dealerships, and vice versa.

In 2007 the Indian manufacturer bought a 17% stake in KTM (Bajaj has since increased its stake in the Austrian company to 35% in 2008, with further investment plans rumored), which allowed Bajaj access to Europe and KTM access to India. Bajaj has also gained some of KTM’s knowledge on two-stroke motors, while KTM has seen the small-bike specialist help them with its soon-to-be released KTM 125 Duke project.

With all these relationships being fostered, and obvious synergies existing, Bajaj wants to take its relationship with each company to the next level (in America we call that Third Base), and change the level of collaboration so it goes three-ways. The affect would be a merger, without the merger.

All three companies have something to gain by partnering with each other, namely complete global distribution and market synergies. With Asian markets likely carrying the industry in the coming years, access to China, Southeast Asia, and India is paramount for all three companies, and for Bajaj gaining a foothold in Europe and the United States is the first step to becoming a truly global brand. Bajaj clearly realizes that it has access to a key market, and can trade this access for a reciprocal favor in other markets.

According to Indian site Bike Advice, Bajaj is looking to make 70% its of revenue from exporting motorcycles outside of India. With aspirations like that, it’s clear why the Indian company would love to see a non-merger merger with KTM and Kawasaki come to fruition. While Bajaj might be getting the better end of the deal in that arrangement, there’s a serious question to be asked if a company like Kawasaki can say no to such a deal. Similarly with Bajaj’s internal pressure at KTM continuously increasing, the Indian firm might just be able to make a formal alliance happen.

Source: Bike Advice via Bikes in the Fast Lane