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At 14 million units, the Indian two-wheeler market is the largest in the world, growing at a CAGR of 14 per cent over (volume) over the last five years. Working to its advantage are factors like India's large population, a favourable 'young' demographic profile, underdeveloped public transport systems and strong replacement demand, as per an ICRA Research report. These reasons together have played catalyst to the growth story of TVS Motor Company in the post-2009 environment. A complete overhaul of the brand - based on a keen study of the market and the consumer - has helped TVS find its way into the top consideration set for two-wheeler buyers.
The focus on scooters as opposed to motorcycles has started bearing fruit for the Chennai-based company - on the back of strong scooter sales, TVS replaced Bajaj at the third spot in the domestic two-wheeler market with its sales exceeding those of Bajaj's in June this year, as well as in the April-June 2014 quarter as a whole. TVS' overall market share improved to 12.6 per cent in the June quarter as a result - and the current figure stands at 13.2 per cent.
It can be argued that the current penetration of scooters in India is around one-third than that of motorcycles. But as more women adopt mobile lifestyles and as scooters get increasingly targeted at both the sexes, the case for penetration-led growth for scooters is a strong one. TVS got its product portfolio in place on the back of a slew of new vehicle launches, particularly from the second half of 2013-14. Some of its winner products since 2010 include TVS Wego, TVS Jive, TVS Phoenix 125, Star City+, a newer racing version of TVS Apache and the most recent TVS Jupiter, in 2013.
With Jupiter, the company addressed a gap in its portfolio by launching it in the heavy scooter segment, while also rolling out a more powerful smaller scooter, the Scooty Zest, for women. TVS aspires to capture 14 per cent share in the domestic market this fiscal, selling around 2.2 million two-wheelers.
TVS' spanking new portfolio is a result of keen customer understanding, or what auto expert VG Ramakrishnan, MD, South Asia, Frost & Sullivan calls "next-gen positioning".
On the back of sturdy launches like Jupiter, TVS has also managed to rope in first-time buyers, gaining share from motorcycles and bringing young male buyers into the category. This has a snowball effect too - the company is able to now pitch its high-value motorcycles to poach consumers from competitors. It recently entered into a joint venture with BMW recently to jointly develop high-end motorcycles (up to 500cc). "It is a sign of a future-ready company," says Ramakrishnan.
It doesn't stop at that. TVS is communicating more than earlier, from a revamp of its website to make it look cooler, to participation in events like the Auto Expo and racing events including the Dakar Rally. Advertising and marketing expenditure for TVS increased 37 per cent to Rs 280 crore in FY14 (3.5 per cent of revenue, against 2.9 per cent in the previous year). Also, in 2011, the once traditional south Indian company aggressively expanded into east India, laying the foundation for a greater national presence.
"It is not just about India for TVS, but also a focus on other two-wheeler markets of Asia, South America, Africa for greater reach," says auto expert Abdul Majeed, partner, PwC India.
Investments in research and development have further added to the success story, which increased 4 per cent year-on-year to Rs 130 crore for FY14.
