Daybreak - How Bajaj's service-first approach is working out for it in the EV market

Episode Date: October 27, 2023

According to latest numbers, Ola Electric, the leader of two-wheeler EVs in India, is losing market share—from 40 per cent in July to just 29 per cent in September. Bajaj Auto, meanwhile, has gained the most market share. It started with just a 4% share in April and now it has gone up to 11%. Ola Electric maybe doing much better with more than 250,000 scooters sold so far but the discontent regarding its after sales services is getting louder. Bajaj, on the other hand, has had a more sustainable growth trajectory and it has a lot to do with its service first approach. Plus, there’s one more thing that Bajaj has going for it that Ola Electric doesn't—the power of nostalgia. In 2020, it brought out its iconic Chetak scooter out of an early retirement in an all-new, high-tech, electric avatar.How far can nostalgia and focus on service take Bajaj in the two-wheeler EV market?Tune in.(With script inputs from Diksha Munjal)RecommendationCharging up the Chetak: Bajaj’s path to new mobility Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Electric two-wheeler market in India has been more or less dominated by OLA Electric throughout, so far at least.

But it is constantly fluctuating. Every month, other two-wheeler EV makers are competing neck to neck in their race to the top. Take Bajarge Auto, for example. In the last four months, it has aggressively ramped up its volumes, which is helping it grab a substantial share of the market. According to latest numbers, Ola Electric is actually losing market share, from 40% in July this year to just 29% in September. Bajar auto, meanwhile, has gained the most market share. It started with just a 4% share in April, and now it has come up to 11%. Now, you might think, okay, 4% to 11% good, but not extraordinary, right?

The thing is, Ola Electric might have started with a bank. To give you a sense of how, bookings for Ola Electric, which launched its first scooter two years ago, crossed the 100,000 sales mark on the first day of sales itself. Bajajan, on the other hand, has had a more sustainable growth trajectory. and a lot of it is to do with its service-first approach. But for Ola, more and more people have been pointing towards the not-so-great after-sale services. Now, and I'm sure you'll agree with this, that in a budding market, this is not a very good look.

Plus, there is one more thing that Bajaj has got going for it that Ola does not. The power of nostalgia. In 2020, it brought out its iconic Chetak scooter out of an early retirement in an all-new high-tech electric avatar. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Da Sharma, and I don't chase the news cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time.

Today is Friday, the 27th of October. I think it was the Russian writer Vladimir Nabokor, who once said that one is always. at home in one's past. Maybe that is why one of India's biggest auto companies chose nostalgia over anything else when it decided to make a foray into the world of electric two-wheeler's with Chetak Electric. Chetak Electric is everything that its predecessor, Bajajara's flagship scooter Chetak used to be, right from the apron-like front body to the single-side suspension. It is all about sticking to the old world charm.

Bajajar has been banking on its legacy and brand recall, and rightly so. The e-scooter is priced just above 1 lakh rupees and to build it, the company had a very startup approach. By the financial year 2023, the domestic sales of Chetak Electric grew over four times to more than 30,000 units. Now, this might not be a lot compared to Ola Electric, which is sold over 250,000 scooters already, but what makes Bajad stand out comparatively, like I said earlier, is its service-first approach. So, Ola Electric may be doing much better in terms of sales, but the discontent regarding its

after-sales services is also growing louder. Stay tuned. Sali Electric has set up 600 experienced centres around the country. Potential buyers can go and take test rights in any of them. but it has only 200 service centres in India. Now, think of the number of vehicles that they've sold so far. 250,000. Just 200 service centres for more than 2.5 lakh scooters?

Let me tell you about this incident that occurred in August this year to give you a better sense of the discontent that this imbalance is leading to. It was a very celebratory atmosphere that surrounded Ola's, Electric stores that month. Employees could be seen bustling around in their bright neon t-shirts. It was the day that Ola Electric launched its cheapest two-wheeler so far. And standing in this crowd was a 27-year-old man named Madhu who raised his hand. People thought that he was going to laud the company for this new feat. But instead, Madhu began asking questions about Ola Electric's after-sale service. So the store manager very quickly assured him to the side of the

room for a chat. But that did not help. Soon enough, the crowd got unruly. So what was Madhu's problem? He had bought the Ola S1 Pro online in November last year for 1.6 lakh rupees. He began by telling the Ken reporters Sashwatha and Anushka that it had been eight months since he bought the scooter but the registration was incomplete still. Madhu claimed that the scooter malfunctioned barely a day after he got it. Right in the middle of a ride, the vehicle just stopped working. What followed were three long months of frustration. Despite Madhu's repeated calls to Ola Electric's customer care

and his rounds to their service stations and experience centres all over Bangalore, the scooter remained unusable. Eventually, his scooter was fixed, but he went through a lot of unnecessary anxiety. There are other similar stories like Madhuz. And it doesn't come as a surprise because it wasn't until the start of this year that Ola Electric actually started linking service stations to its physical stores. This was meant to streamline servicing and repairs for buyers. An ex-employee told us that Ola Cabs even turned its empty workshops into service centers

after it sold off its taxi fleet during the pandemic. Still, this was not enough. A former OLA Electric employee told again that the company started off servicing operations with just 750 technicians. But the number began to fall after people started leaving. The employee estimated that the company actually needs at least 1,500 technicians around the country. My colleagues, Anushka and Shashito, went to an Ola Electric Service Station in Bangalore's Indira Nagar to see what was going on. That particular station has a three-person team that tends to 100 to 120 scooters every month. Now, on an average, each scooter requires roughly two hours of work.

Plus, another issue is finding skilled people who can actually work on EVs, especially in small towns. It is very tough. So, what isola Electric doing? It is outsourcing its servicing problems with the hope that it will help. help with its staff shortage problem. It has turned to Ready Assist, which is a company that offers bike and car repair services. Its executives have been training third-party technicians to visit homes and handle minor issues, while major problems like faulty batteries, wiring and motors are being worked upon at their service centres. Now, let us go back to Bajaj and see how it is

doing things differently and how that is working out for the company. Raj actually has a policy of selling its e- scooters only in cities where it has service centres. In fact, it has very staunchly pursued a separate service centre approach for Cheetahe-Tac Electric since its debut. A manager at a Cheetahe dealership told the kin that until December 2022, Cheetah repairs were being done at the service centres of KTM, which is Bajaj's motorcycle brand. Then, Bajad started pressuring dealers to expand. into exclusive Chetak service centers. But this hasn't been going down too well with its dealers due to a number of reasons.

The first one, of course, is that the EV game is not as stable for auto dealers yet. They are used to generating reliable, recurring income and substantial profits from services. But with EVs, that is not the case. Dealerships also need a lot of money for real estate ownership or rent. They have to pay salaries and operational costs such as. electricity supply. The money that they spend could potentially run up to 4 to 5 lakh rupees per service centre. It is expensive and it is risky. But Bajar has been trying to sweeten the deal. It has started moderating its expectations from dealers as now they can earn up to 40% less than what they did

servicing normal non-electrical vehicles. Now if you look at how Bajajaj's share in the electric scooter market is growing slowly and steadily, unlike Ola Electric, I think you'll agree that its service-first approach is definitely working in some way. Maybe not as fast as it would like it to, but it is heading in the right direction, but Raj's handling this with foresight and experience, of course. What we will need to wait and see is how it incentivizes the service-first approach for its dealers in the long run. Because no matter how, keen the automakers are on portraying their EVs as low maintenance options, the need to set up a dependable after-sales service network cannot be overstated.

Daybreak is produced from the Newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps and podcast extras. Head to the Ken.com and click on the red subscribe button on the top of the website. I am Snigda Sharma, your host and today's episode was edited by my colleague Rajiv Sien.