TVS bets on premium bikes to improve margins in domestic and global markets

TVS Motor, one of the country's leading two-wheeler makers, is betting big on premiumisation. The company's management says it will be a key driver of improve company's profit margins both in domestic and international markets.


Addressing shareholders last week, Venu Srinivasan, Chairman & Managing Director of TVS Motor, said, “while we have a long-term strategic partnership with BMW, Norton (the UK brand TVS acquired in April) enhances TVS Motor’s global portfolio, brings complementary product segments, markets and capabilities in the super-premium category.” 


He added that the company’s new launches in the high-end bike segment have paid dividends, as TVS Motor has garnered 23 per cent share in this category. “Going forward, we do look at premiumisation as one of the ways of improving our profit margins both, in domestic and international markets.”


Over the past 14 years, TVS has developed a host of premium offerings ranging from 160-310cc. TVS Apache was able to garner a substantial share of the premium motorcycle market with 370,000 units, posting a decline of only 21 per cent in sales, compared with a 25 per cent drop year-on-year in the premium motorcycle industry in 2019-20. TVS churns out 25,000 units a month of TVS NTORQ, a premium scooter whose sales grew by 24 per cent even as the scooter segment in India declined by 17 per cent.


ALSO READ: Auto manufacturers let go of contractual workers as slowdown bites


Premium offerings such as TVS Apache, TVS Ntorq and the electric TVS iQube will help revive demand in the near future, the company says. In April, TVS acquired Britain’s iconic sporting motorcycle, 'Norton', which is expected to give the firm a big entry into the super premium category and the classic racing buyer segment. The company plans to launch more premium products in future.


Sudarshan Venu, Joint Managing Director, TVS Motor Company, said, "The Norton acquisition is in line with our effort to cater to the aspirations of discerning motorcycle customers.  We will extend our full support to help Norton regain its full glory in the international motorcycle landscape.” 


The immediate focus will be on the 21 developed markets in which Norton is already present, after which TVS will look to expand to some key developing markets such as India. The company says its strong relationship with BMW will continue, while Norton is in a different segment of the market of 850-1,200 cc.


"We are all going through a period where I don't think it is any way going to affect the aspirations of India. And India is a young country. And we want to really look at products which are premium, going forward. My hypothesis is premiumisation will happen. India, we have a very strong, young segment, which definitely looks forward to futuristic products, futuristic technology. I think that is reflected in the demand as well in Apache and NTORQ (company's premium product)," said K N Radhakrishnan – Director and Chief Executive Officer during the investors call.


He added, there may see some hiccups in urban markets today, but premiumisation will happen. This could be slightly delayed, but there is no way the customer's inherent behaviour is going to change.


Premiumisation will happen both, in the urban and the rural sectors, Radhakrishnan said, adding that there is nothing like rural consumer or an urban consumer, as those in rural areas are aspiring to become urban. 


He said, TVS had a severe production constraint for Apache. While the demand has been outstanding, a huge reduction in production had affected supply. But he said Apache numbers are much, much better this month and production has moved to a good level. 


"It can be a little better, but I'm very sure we will be able to come back very soon between July and August. And retail in the market is very positive for our brand Apache," said Radhakrishnan.