Chennai: India’s third largest two-wheeler maker, TVS Motor Co. Ltd, said it would launch nine new vehicles in as many months, aiming to plug a gap in its product offerings and improve profitability by offering more expensive bikes
The new vehicles, spread across three classes—motorcycles, scooters and autorickshaws—were developed over the last two to three years. It is expected to increase the operating profit margin (the difference between sales and cost of production) of the Chennai-based company by 3% to 8%.
“We kept silent so far on the drought situation prevailing in the two-wheeler industry,” said Venu Srinivasan, chairman and managing director of TVS Motor. “Today, we are ready to show that by March 2008, we will have a complete product range,” he added.
The new products, Srinivasan said, would be priced within the 3% of similar models from competitors, adding that a price war doesn’t pay.
“We have spent 3% of our sales on research and development (R&D) efforts in the last three years,” said Srinivasan. If based on fiscal 2007 sales, that could be around Rs117 crore.
The Indian two-wheeler industry declined last year by 12%, mainly on account of higher interest rates for vehicle financing. Motorcycle sales fell by as much as 15%. The decline has resulted in an inventory build- up, which forced companies to scale back production.
The slowdown in the industry has affected TVS adversely in the last nine months, as sales of its entry-level bike, Star, declined and, at the same time, the company was not able to pass increases in raw material costs to consumers because of intensifying competition.
The company will launch two vehicles targeting the executive segment of motorcycles by September. It has a negligible presence in this segment, which is 45% of the total two-wheeler market. TVS hopes to garner 18% market share in the executive segment, where margins are higher than the entry level.
In September, it also plans to launch an upgraded version of Star; a two-stroke three-wheeler with both CNG (compressed natural gas) and LPG (liquefied petroleum gas) options; and an electric scooter.
The second stage of new launches would be in the January-March quarter, when TVS is planning to launch a new scooter, an upgraded Scooty, and a four-stroke three-wheeler.