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Auto industry experts and analysts have given the thumbs-up to two-wheeler major TVS Motor Company’s acquisition of beleaguered iconic British motorcycle brand Norton Motorcycles for about ₹153 crore.
The surprise move is in the interest of long-term growth and value creation, they said.
TVS Motor has been upping its ante in the higher cc segment ever since it launched the Apache range of bikes, and its sales have been gradually increasing in the 150cc and above categories. It also entered into a long-term strategic partnership with BMW Motorrad to manufacture sub-500cc motorcycles for the global market. This collaboration has resulted in the launch of at least three products in the 310cc categories.
The Norton acquisition is expected to further strengthen its plans to become a strong player in the high-end bike categories in future.
New segments
“TVS acquiring Norton will bring about a host of benefits for them,” said Ashim Sharma, Partner & Group Head, Business Performance Improvement Consulting at Nomura Research Institute. “It will ensure they cover the 500cc plus segment which was not part of the BMW tie-up, plus it will give them a good entry into the cruiser/classic bike segments which was a white space in their portfolio.”
“In addition, TVS Motor will get access to the European market wherein Norton has a cult following and, given the increasing share of premium bikes in India, TVS now has a great brand in its kitty to bring to India. Lastly, high-end technology at Norton from their iconic Motorsport history, coupled with frugal engineering at TVS, will certainly unlock good synergies for both brands,” he added.
Norton has various brands in segments ranging from performance bikes to cruisers with engine sizes of 600cc-1,200cc. So, its strong brands will aid TVS’ entry into the lucrative cruiser bike segment in the above-500cc engine categories in new markets like India.
Suraj Ghosh, Principal Analyst, Powertrain Forecasts, IHS Markit, said as the domestic two-wheeler market has been showing a steady shift towards lifestyle and performance-oriented products, it appears to be an apt move by TVS to cater to that segment. As younger customers are breaking the ‘price-sensitive’ image and looking beyond just the sticker price, this segment is expected to grow at a much faster rate in future, he added.
Asian markets
In the past few years, Norton had been gaining entry — both directly and indirectly — in Asian markets like Japan and China, which can now be strengthened by TVS Motor.
“TVS has everything to gain from this acquisition as it aims to expand into newer geographies. With a rich history of hand-made motorcycles and racing legacy, Norton has a global novelty value that will help in tapping export opportunities,” said Ghosh.
Norton has been selling its bikes across 21 markets including European countries and exports account for more three-fourth of its total revenue.
“In the context of capabilities and opportunities, the Norton deal provides TVS Motor with a much cheaper route to elevate its position. It could provide a firm launchpad to combine its strong cost and quality focus with Norton’s products, technology and brands to explore both the existing premium domestic market and export opportunities on a larger scale,” said auto analysts at ICICI Securities Ltd in a note.
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