'Our Motto Is Quality Products'

The two-wheeler segment of the automobile industry has defied recession and kept growing rapidly. TVS Suzuki, a leading player in motorcycles, has entered the scooters segment recently with the launch of Spectra. Against this backdrop, Venu Srinivasan, chairman and managing director of TVS Suzuki spoke to Aravamuthan Sasikant about the past, present and the future of the company.

Q: What is your view on the automobile industry?

A: The fortunes of the industry other than the two-wheeler segment will not witness any major change in the next one to two years. But the two wheeler industry will continue to grow and has good potential for the next couple of decades as the penetration level is one of the lowest in the world. One reason for the low penetration level is the lack of infrastructure like roads in most places other than major cities.

 

Q: What went wrong with TVS Suzuki? How did you manage a turn around?

A: Right from inception, TVS Suzuki was different from the TVS group tradition. First, it had a high debt-equity ratio. Second, almost all the people were new to the company and third it was the first Japanese joint venture. Between 1987-90 we brought in the entire top management from the TVS group. Also, the merger of the mopeds division with TVS Suzuki helped as it has almost similar managerial structure. This helped in finding replacements at all levels in the corporate hierarchy. We brought in turnaround experts. During that period, quality was the motto, and we started implementing TQM.

Being a part of the TVS group also helped us a lot in achieving this. The group is characterised by cultural and value congruencies. More important was the cultural turnaround which happened even before the financial turnaround. Upgradation of sales standards and dealership network was done simultaneously. New product launches supported by aggressive ad campaigns were done. The ad campaigns were focused not only on the new products but also in bringing about an improvement in the corporate identity of the company.

Q: Why did Shogun fail?

A: I wouldn't call Shogun a failure. The objective of launching Shogun was to position ourselves within the two wheeler industry. It was also a brand building exercise. In the two wheeler industry, Yamaha is a high powered motorcycle and positioned there, while Hero Honda was positioned as a fuel efficient one. TVS Suzuki was nowhere at that point of time.

Shogun proved that we also had the R&D capability of producing high powered motorcycles. This positioned the company as 'the boss' and got the brand value and recognition. Though you might quantitatively call Shogun a failure, qualitatively it was a great success in positioning the company and in building a brand.

Q: What was the reason behind entering scooters? What size of the market are you looking at?

A: We entered scooters as we wanted to expand our market. Motorcycles account for 45 per cent of the two wheeler market. We did not want to be left out of the remaining 55 per cent as we see ourselves as a personal transportation company. The launch of Spectra was more in line with that mission. We are looking at a market share of 6 to 7 per cent in scooters in the first three years. Later we expect a market share of 12 per cent.

Q: With Bajaj also planning to launch four stroke scooters, will you be taking the market leader head on?

A: We don't intend to compete with the market leader. We want to create a niche market for ourselves. As you can see, the design itself is totally different from the traditional image of a scooter. Spectra has attributes like centralised engine which improves the control of the scooter which is not the case with single side engine scooters. There are many attributes like this which make this a niche product for a quality conscious customer. We are not seeing Bajaj as a competitor at all. We have positioned ourselves as a quality conscious company with our motto being quality products.

Q: Why is it that you are launching the scooter in the north and not in your stronghold of southern states?

A: We are starting off with Delhi because it is the biggest scooters market in India and has one of the highest scooter penetration levels in the country. This was precisely the reason for us to launch our scooters in Delhi followed by state-wise launches in other parts of the north. We are coming down from northern states because the demand there is tilted towards scooters, while in the south, it is more in favour of motorcycles.

Q: Why are you opting for a state-wise launch rather than a national launch?

A: There are many advantages of a state-wise launch. Logistics and other associated problems in a product launch can be tackled effectively while opting for a state-wise launch. Training of mechanics other than those in the authorised centres can be done easily. Plus, if there are any problems in the first batch of products, it is easy to rectify them as the batch will be concentrated in that state of launch and not on the national scale. This does not mean that we might face problems with our initial batch, but it is a strategy to handle the most difficult problem which we don't expect to occur anyway.

Q: Are you planning more launches ?

A: Yes, We are planning to introduce a four stroke motorcycle, and more launches in the next three years and introduce four stroke variants in all our existing models including the mopeds.