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India: Who Wins In The TVS-BMW Deal?

11
April
2013
  Posted at 02:00:00 PM
  File under  BMW
  Author: Mike Werner
  Location: Normandy, France
click to see where India is on the map

A lot has been written recently in the press about the TVS Open TVS in a new window / BMW Motorrad Open link in a new window deal. The rumors had been circulating since last year that the two motorcycle manufacturers were looking at some kind of a joint-venture, possibly like the one between KTM and Bajaj. But is it the same deal, and will both parties benefit from it?

TVS used to be India's third largest motorcycle manufacturer, today it's been pushed into the fourth spot. Bajaj and Hero MotoCorp both dominate the local and export scene. TVS had a link-up with Suzuki, but since both sell independently, it hasn't done much to increase TVS market share.

TVS BMW Agreement

BMW have been producing premium motorcycles, usually in large displacement, and have been trying to penetrate the lucrative Indian market. They have recently had a motorcycle brand that produced lower displacement models, Husqvarna, but they sold the brand to KTM's CEO.

A lot has been written that BMW is now going to produce motorcycles in the "lower than 500cc" range with this new venture. But BMW already was, with the G450 series, though they did not make the engine. Will the new motorcycle be a real joint-production, or will BMW buy the new engines from TVS?

The TVS/BMW does not involve financial participation like the KTM/Bajaj deal. No money or stock is changing hands.

So who benefits from this deal? TVS are by far a bigger motorcycle manufacturer (>2 million units per year) while BMW (selling 117,000 units per year) are more high tech.
  • TVS are not going to be selling their <250 cc bikes through the European and North American BMW dealers. There just is no market for those kind of bikes.
  • Is the Indian market interested in a TVS <500cc motorcycle?
  • BMW might be selling a few premium bikes through TVS shops in India, but it would involve a heavy training program for TVS mechanics to work on BMW models. So TVS would not become a BMW distributor.
  • TVS would get extra "credit" for the tie-up with a worldwide brand such as BMW, adding to their "prestige". But it's doubtful, especially since their stock already got hit a few hours after the announcement (at the time of writing it was down 7%).

So... what do you think. Is this a good deal or are they pissing in the wind?





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