New Delhi: TVS Motor Co. Ltd is in talks with German auto maker BMW AG’s motorcycle division, BMW Motorrad, to source technological know-how for developing high-end motorcycles, as the Chennai-based two-wheeler maker prepares to battle larger rivals Hero MotoCorp Ltd and Bajaj Auto Ltd, who have signed similar pacts with partners.
“It is correct that we are in talks with BMW,” TVS chairman Venu Srinivasan said in an interview on Sunday. “We are looking at a technical contract. I will not be able to share any further detail at this moment.”
Pune-based Bajaj Auto has a 47% stake in Austrian bike maker KTM. Hero MotoCorp has also announced a technology tie-up with US-based motorycling company, Erik Buell Racing Llc. (EBR) for engines.
The Hindu Business Line reported on 8 July that TVS Motor is exploring options for a possible tie-up with BMW Motorrad. Srinivasan told the newspaper that equity sale is not being considered in the partnership.
Citing unidentified people, the newspaper had reported the partnership is likely to involve a technology sharing pact and may also extend to joint marketing.
“We are honoured with what BMW has opined about us and, therefore, we are coming in public about this partnership. We will come with more details in due course but not in the distant future,” Srinivasan said on Sunday.
In an interview to the German edition of the Financial Times, Hendrik Von Kuenheim, president of BMW Motorrad, had praised TVS Motor’s production facilities. Kuenheim compared TVS’s engine-making room with those in Formula One.
TVS Motor has plants in Hosur (Tamil Nadu), Mysore (Karnataka) and Nalagarh (Himachal Pradesh), apart from Karawang in Indonesia.
BMW Motarrad owns the Husqvarna brand besides its own motorcycles. In the past, the company had said that it is looking to introduce the Hauqvarna brand in India.
In July 2007, Husqvarna Motorcycles of Italy was purchased by BMW. BMW Motorrad plans to continue operating Husqvarna Motorcycles as a separate company.
Husqvarna manufactures motocross, enduro and supermoto motorcycles. Husqvarna, like KTM, specializes in on- and off-road dual purpose machines and notably is also in the same competitive space as KTM.
According to an industry expert, it is imperative for Indian companies to have high-end technology to build brands to compete with global firms in the field of performance biking.
“While, the lower-end bikes continue to be bread and butter segment for these companies, eventually, one has to move towards higher displacement engines and into segments such as sports, leisure and racing. The advantage that Indian manufacturers will get is not only limited to technology but a a brand push, which is required to sell products in the global markets,” said Deepesh Rathore, managing director, IHS Automotive, a consulting firm.
Rathore said Indian companies may look to participate in motorcycle racing events that happen overseas, where companies like KTM, Husqvarna and Honda participate actively.
For example, through its alliance with EBR Racing, Hero MotoCorp will also for the first time enter the world of motorcycle racing. The company will mark its foray into the racing arena by sponsoring two teams: Team Hero and AMSOIL Hero—a first by any Indian two-wheeler company at the AMA Pro Racing National Guard Superbikes Championship.
TVS Motor’s move to form a partnership with BMW will also help the former arrest its declining market share. In the last financial year, the company slid to the fourth position in terms of sales.
In the last fiscal, the Indian two-wheeler industry grew at 14% to sell 13.4 million units. While other manufacturers posted strong double digit growth, TVS grew at 7% to sell 1,895,500 units. In the year, its market share shrank 1.65%.
India’s cost-effective high-volume facilities will encourage this tie-up to create a series of entry-level bikes for western markets, said Rathore of IHS Automotive.
“Globally, there is a huge opportunity for 200cc bikes and people are preferring compact bikes,” he said.
Currently, TVS does not have the technology to manufacture motorcycles with engine displacement of more than 180cc.
“The marriage could augur well for both the companies,” Rathore said. “While BMW will get the know-how of compact bikes, TVS could get technology to manufacture high-end motorcycles.”