TVS Motor Company is seeking to step it up. BMW Motorrad wants to tone it down. To do just this, the two motorcycle makers today entered into a long-term agreement to produce a new series of under-500cc bikes

The agreement marks the entry of TVS Motor into the over 250cc segment and of BMW into the under-500cc category.

TVS Motor will invest €20 million (approximately Rs 142 crore) in the next two years to make motorcycles at its plant in Mysore or Hosur. BMW will bear the cost of testing and development in Germany. The motorcycles are expected to roll out by the end of 2015. Two distinct products, with different specifications, will be produced under each brand name to be sold by both partners in global markets, through their respective distribution networks.

“There is no geographical division as both products will be sold in all markets,” said Venu Srinivasan, Chairman, TVS Motor, announcing the alliance at a high decibel event here on Monday.

TVS and the German vehicle maker have been working on this tie-up for some time now. “This co-operation combines the ability of TVS to develop small motorcycles (by global standards) in mass scale with the high quality and technology of BMW,” said Srinivasan.

Stephan Schaller, President, BMW Motorrad, said, “We have an experienced partner in TVS Motor Co… This agreement gives us an opportunity to tap emerging markets.”

The “long-term” agreement fixes no time-frame. It does not entail any equity participation or royalty payments, as it involves two distinct badges.

TVS Motor’s share price closed 9.93 per cent higher at Rs 39.85 on the BSE on Monday.

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