Indian automaker TVS Motor Co Ltd is getting access to BMW’s motorcycle technology as the two companies entered a deal last Monday for the joint development of bikes. TVS Motor is doing this as part of a strategy to halt the decline in its market share. Under this agreement, TVS will be able to revive an old product pipeline that has been struggling to keep up with Honda Motor Co and Yamaha Motor Co.
In addition, BMW will be able to gain a foothold in India, which is the No. 2 biggest bike market in the world. TVS Chairman Venu Srinivasan said that the company aims to leverage the strengths of each other to offer a new lineup of products that offer advanced technology for its buyers. He also revealed that the products will be released in 2015.
TVS shares increased by up to 17.3% after the deal was unveiled. It ended the day with a 10% increase at 39.75 rupees ($0.72) on a Mumbai market that ended flat. Srinivasan said that in this partnership, TVS will make an investment of 20 million euros ($26 million). BMW didn’t offer any details about its investment in this tie-up.
In a press release, TVS said that two companies will design and build a range of motorcycles in the sub-500 cubic centimeter segment. However, every company will sell individual variants of the bikes via their separate distribution channels.
BMW, which posted sales of 117,000 motorcycles last year, depends heavily on Western markets like the U.S., Germany and France. It has an insignificant presence in India, where it has annual sales that fall behind China. BMW Motorrad President Stephan Schaller said that with the TVS partnership, BMW will be able to develop more compact and less powerful motorcycles.
During this financial year that ended in March, TVS’ sales declined by over 6% compared to the overall industry’s 4% increase. It has been having a tough time ever since market leader Hero MotoCorp split from Honda in 2011 and instigated a surge in competition and the market leaning towards more expensive, more sophisticated vehicles.