The Hindu Business Line : TVS Indonesia facility to bolster export potential

Jakarta, July 16 TVS Motor Company is putting in place a strategy to go global by leveraging its step-thru development and manufacturing facility that it has just finished setting up here in Indonesia. In addition to being able to export to and service the Asean market countries from the Indonesian plant, TVS is actively considering exporting similar two-wheelers to markets such as Brazil and other South American and African countries.

For the purpose of accelerating product development and marketing strategies that will be uniquely suited to markets that are dominated by step-thrus and not by the kind of bikes that are more common in India, TVS is planning to take advantage of the synergies that it can derive by setting up a local R&D centre at the Karawang plant in Indonesia.

The plant has been set up under a subsidiary of the Indian two-wheeler company — PT TVS Motor Company Indonesia. The plant, which will eventually (at full production) have a capacity to manufacture three lakh step-thrus, has been in operation for the past few weeks. Currently, TVS’ first two-wheeler for the local Indonesian market is Neo, a step-thru with innovative features.

The new step-thru is on the verge of being launched in West Java, after which, in phased manner, it is to be rolled out nationally in Indonesia.

Speaking to Indian journalists on the sidelines of the formal inauguration ceremony here on Monday, Mr Venu Srinivasan, Chairman of TVS Motor Company, said that the local R&D centre will specialise in the design and development of two-wheelers that will be tailored to specifically cater to customers in the Asean and similar markets.

The Indian R&D unit of TVS will, in the meanwhile, continue to work on new technologies that will be applied across all the models and will also be working on new models for the Indian market.

Mr Srinivasan said that the Indonesian operations hold a lot of potential for boosting the company’s exports to other markets in the region due largely to the high productivity of the labour and capital in Indonesia. TVS’ Neo step-thru bike is to be launched later this month. The company is targeting sales of about one lakh units this year in the market here. TVS’ plans include exporting at least 20 per cent of the total production from this plant within the next five years. The total market for two-wheelers in the Asean region is estimated to be 10 million units. The R&D centre at Karawang will be involved in designing all future vehicles for this market.

The total Indonesian market for two-wheelers is about five million units annually. Step-thrus, also called ‘Bebek motorcycles’ here, constitute an overwhelming majority of this market and within this segment, the three big Japanese two-wheelers makers — Honda, Yamaha and Suzuki — have a hold over a major chunk of the market share.

The Karawang plant was formally inaugurated by the President of Indonesia, Mr Susilo Bambang Yudhoyono. The plant has been set up with an initial investment of $50 million. TVS plans to scale up the total investment to $100 million by year 2010. Currently, the Neo step-thru is manufactured with a local value-add content of 40 per cent. This is to be gradually increased to 80 per cent over the next three years.

The Neo is being launched with four variants with features such as disc brakes, electric self-start, alloy wheels and even a dual — automatic and manual — clutch option. The bike is to be distributed through 60 dealers around the country by early next year, when it will be nationally available. The Neo would retail for about Rupiah 11.8 million in Indonesia — the equivalent of about US $1,300.

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