Financial Daily from THE HINDU group of publications
Tuesday, Jan 21, 2003
Self-reliance, volumes drive TVS Motor's success
Shyam G. Menon
HOSUR, Jan. 20
THE price of self reliance is finding virtue in being second?
TVS Motor Company, which energised the domestic motorcycle market with the indigenously developed `Victor' and dispelled in the process the myth of foreign collaboration as a must for success, is one manufacturer that seems happy to enter market segments late. At least, for the present.
Following the termination of its understanding with Suzuki, the company has been selling its motorcycles under the `TVS' brand, since May 1, 2002.
The 4-stroke Victor, launched in 2001, and sustained market acceptance for the three variants of its 2-stroke Max 100, played no small role in securing TVS's place in the Indian two-wheeler market, at a time when most other players continued old ties or forged new ones with foreign manufacturers.
In 16 months since launch, the Victor has sold over 300,000 units.
However, as seen today, barring the Fiero, all other TVS motorcycles fall in the volume segment. In contrast, resident players have expanded high powered segments, like Bajaj with its Pulsar, or offered new propositions like the cruiser segment featuring Kawasaki's Eliminator and Yamaha's Enticer.
Sales in these categories are not sizable when compared to the industry's bread and butter executive segment.
Yet it has set in as a glamorous trend, the latest in such news being Kinetic's decision to import Hyosung cruisers, all of which keeps TVS apart from the pack.
On the plus side, TVS is widely recognised in the domestic industry as a manufacturer with strong R&D skills.
For 2003, TVS - which sees 125cc engines as the market's next centre of gravity - has lined up a new Fiero, a new Scooty, a wholly new motorcycle and variants of the Victor.
In true TVS style, despite the likelihood of a costlier version of the Victor, focus is on the brand new bike, which officials insist is "not a fringe product'' but one for volume sales.
Even the improved Fiero harbours a volume punch - it is promised to sell at the same price as today's Fiero.
Mr Venu Srinivasan, Managing Director, TVS Motor Company, who said it typically costs Rs 25 crore to develop a new bike, maintains there is logic behind the stress on volumes and TVS's desire for minimum numbers in a segment before entering it.
In fact, he wants somebody else to open up a segment, trigger the volumes and then have TVS come in - its steadily dipping lead time for developing new models catalysing the pace of entry.
"We don't have that much money. We are like AVIS. Number two, but we try hard,'' Mr Srinivasan told journalists from Mumbai visiting the company's Hosur plant, on Saturday.
That aside, numbers and sensible products, are in line with a stated TVS intent - of being a major Asian two wheeler company in the next five years. This fiscal, it had over-100,000 units monthly sales in September and October, and "may cross one million if not 1.2 million units for the full year.'' Motorcycle sales this fiscal, has been more from the urban markets.
By 2010, TVS hopes get a 12-15 per cent market share in Asia. What does this mean?
With the Chinese market estimated by then to be 20 million units-strong, that of India at 10 million units (Mr Srinivasan sees the domestic market growing at 10-12 per cent with motorcycles at 15 per cent, over the next 5-10 years) and the Asean market at 10 million units, TVS would have to be a manufacturer of 5-6 million two wheelers.
It requires hard work, including new products to meet particular market tastes. TVS is "moving towards'' appointing consultants for potential manufacturing operations in Indonesia and Vietnam, Mr Srinivasan said.
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