TVS rides on value in premium slab

Two-wheeler maker picks up engineering best practices from BMW to create a niche market of its own

Two-wheeler manufacturer TVS Motor Company recently launched the Apache RR 310, claiming the model marks its entry into the “super-premium bike” segment. The company had tied up with motorcycle brand BMW Motorrad in April 2013 to manufacture bikes under the sub-500cc segment. Given the strategic tie-up between the two, the question is how can a home-grown company like TVS gain from the expertise of BMW Motorrad as it forays into a new range within the premium segment, which includes bikes in the 150cc-500cc range.

TVS has touted the new 310cc model as a “super-premium” bike, prior to which its premium bikes were in the range of 150cc-200cc.

TVS started building the premium brand, TVS Apache, with 150cc and subsequently launched 160cc, 180cc and 200cc bikes. TVS Apache is a flagship for the company and is amongst the fastest growing premium motorcycle brands in its category. Over the last 10 years, it has reached 2.5 million customers.

Arun Siddharth, vice-president, marketing, premium motorcycles, international business and TVS racing, TVS Motor Company, says the two-wheeler firm is driven by its promise of delivering more to its customers than their expectations.

Asked about the benefits from the company’s tie-up with BMW, he says, “This strategic partnership has resulted in a win-win situation for both. BMW Motorrad is synonymous with world-class quality engineering and TVS with its world-class manufacturing capability ensure that this cooperation has long-term symbiotic benefits for both companies. The key learnings from both sides have helped create aspirational products and have opened up market opportunities for both.”

TVS Motor has made investments of around Rs 400 crore after the agreement with BMW in 2013. The latest model is being co-developed by the two companies at TVS Motor’s Hosur plant in Tamil Nadu.

Siddharth adds the Apache RR 310 is the most advanced and exclusive bike in its product portfolio, and is a manifestation of learnings of 35 years on the race track coupled with cutting-edge technology, positioned towards fulfilling the aspirations of new customers.

“TVS Apache RR 310 will definitely build on the momentum and help the mother brand grow with this top-of-the-line offering. We are confident that the customers will find it to be a perfect combination of race-crafted technology and riding dynamics,” he says.

The company is looking to sell 10,000 bikes (Apache RR 310) in the first year of its launch.

With India emerging as the second largest two-wheeler market in the world, Siddharth says the vehicles have become a symbol of status, excitement and pride, while continuing their original purpose, which is to provide safe, efficient and comfortable rides. “We have a comprehensive product portfolio across scooters and motorcycles, with good market acceptance that has helped us grow faster than the industry.”

According to the company, the 150cc-400cc segment is around 14 per cent of the overall market and while the industry is growing at 10 per cent compounded annual growth rate (CAGR) for the past four years, TVS Motor is recording 28 per cent CAGR.

TVS has been manufacturing and exporting the bike — which is expected to compete in a segment alongside the likes of Bajaj Dominar — for BMW, under the collaboration, for the global market in the recent past.

The premium segment is currently led by Eicher Motors. Saurabh Jain, associate vice-president, research (equity), SMC Global Securities, points out that TVS commands a leading position in the 150cc-200cc segment. The partnership with BMW will only bring goodwill to TVS, given the marquee brand name of the former, he adds.

With entry in super-premium segment, the price of the Apache RR exceeds Rs 2 lakh. Jain argues that buyers spending such amounts on a bike have high brand awareness, so he expects a good response to the new variant in the market.

“The premium and super-premium segments are relatively new areas that are being explored by TVS. Moreover, this segment is recession-proof, as we saw the likes of Eicher Motors and Enfield doing well even during a slowdown,” says Jain, adding that many companies are trying to tap into this market segment even as Eicher enjoys dominance.

The other significant benefit from a partnership with BMW and forays in the premium space is creation of value for the TVS Motor Company. While the segment itself is only 14 per cent currently, there is much scope for growth.

Jain reckons creating market will be the biggest challenge and time-consuming aspect for a company like TVS, although the initial recognition it is garnering now would help for a start. “When this market will grow, companies like TVS will take a lot of time to gain recognition in terms of numbers.”