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Eleven years after parting ways with Japanese partner Suzuki Motor Corporation, Chennai-based TVS Motor Company is looking at a new collaborator.
Its Chairman, Mr Venu Srinivasan, has confirmed that the company is in talks with premium German auto-maker BMW’s motorcycle division, BMW Motorrad, for a tie-up.
Though an equity sale by the two- and three-wheeler maker has been ruled out, sources said the partnership will likely involve a technology sharing pact and may also extend to joint marketing. Both partners reportedly see a strong gain as it could fill the gaps in their respective portfolios.
“We are in discussions with BMW for a tie-up, but at this point I can’t reveal more details. However, equity sale is not being considered,” Mr Srinivasan told Business Line .
Recent media reports have likened the partnership to the Bajaj-KTM tie-up, the difference being that Bajaj has a 47 per cent stake in the Austrian firm.
In the TVS-BMW partnership, TVS could use BMW’s expertise to extend its premium bike range, where it currently has the Apache (160cc, 180cc). BMW may get a strong local partner, helping it expand its network rapidly, gain market knowledge and cut manufacturing costs.
With an eye on volumes, premium player, US-based Harley-Davidson, has already set up a plant in Haryana. The UK’s Triumph has also purchased land in Karnataka.
Frugal Engineering
An analyst with a top European consultancy said it was necessary for any global bike-maker to have a serious focus on India — the second largest two-wheeler market after China. The developed markets are now saturated and Indian companies’ penchant for low-cost engineering is critical to drive cost efficiencies.
“If BMW wants volume growth, such a tie-up is necessary. TVS definitely has a good reputation in terms of processes and technology,” the analyst said. This move may give TVS an edge in the market where Honda, Bajaj and Hero have made strong gains. Recent times have been tough — though its two-wheeler sales rose 7 per cent in 2011-12 to 1.89 million units (sold 14,172 three wheelers as well), it lost the third position in the segment to Honda (1.99 million units) in the year. The company’s previous partnership with Suzuki had lasted 19 years till 2001, under which it released a range of motorcycles, including the Suzuki Samurai, Suzuki Shogun and Suzuki Fiero models.
China Plant
TVS will also start making its two-wheelers in China by end of this year through a contract manufacturing tie-up.
With a focus on exports to Africa, Chinese assembly has been chosen for lower cost of manufacturing, stable policy environment, higher efficiency and huge competitive supplier base.
“We have finalised the Chinese company who will be manufacturing bikes based on our design and will use our brand. These bikes will not be sold in China or India,” Mr Srinivasan said. TVS Motor has plants in Hosur, Mysore and Nalagarh (Himachal Pradesh), apart from Karawang in Indonesia.
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