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Apr 08, 2013, 11.28 PM IST | Source: CNBC-TV18

No significant benefits for TVS from BMW pact

CNBC-TV18’s Ronojoy Banerje reports that the alliance with BMW offers no significant benefits that would aid TVS reclaim the fall in sales and marketshare.

TVS and BMW have finally announced the much-awaited alliance . The deal will see allow TVS access to BMW's technology while allowing the German auto giant access to Indian markets by producing smaller, tailor-made bikes for Indian roads.

TVS said on Monday that it would invest upto 20 million euros as part of the alliance. Sales and marketshare at TVS has declined over the last few quarters. CNBC-TV18’s Ronojoy Banerje reports that the alliance with BMW offers no significant benefits that would aid TVS reclaim lost ground.

From a brand perspective, it has started to create a lot of excitement in the two-wheeler market as reflected in the way in which the company’s share prices have gone up in the bourses since last week Thursday when CNBC-TV18 reported that the deal would be announced on April 8.

With an overall marketshare in the motorcycle segment of below 8 percent, this deal is unlikely to dramatically change the fortunes of TVS, at least in the short run, principally for two reasons. This alliance will focus on high-end motorcycles. And the company has gone on record to say that it will concentrate on sub-500cc bikes. There is no likelihood, at this stage, of BMW helping TVS penetrate over 95 percent of the motorcycle segment that is below 150cc.

The first set of jointly developed motorcycles that will hit the Indian markets only in 2015. By 2015, competitor Honda may come up a few 300cc motorcycle brands. So, the alliance is not going to help TVS gain market share.

The alliance will allow TVS to leverage BMW’s strengths in branding and technology. However, it remains if TVS will be able to embrace BMW’s high-end technology to power its 150cc segment.

READ MORE ON  TVS, BMW, Sales , marketshare, motorcycle
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