The Long Game: TVS Motor Rides On New Turf
The company's foray into EVs and collaborations, along with its recent acquisitions and investments, paint a pretty picture for business.
TVS Motor Co. seems to have shifted gears to fast lane over the last few years, thanks to acquisitions of e-mobility firms, investments in tech startups, going full-throttle on electric-vehicle front and roping in partners in the overseas markets to expand the export basket.
To steer the transformation, Sudarshan Venu, son of Venu Srinivasan, took over as the managing director of TVS Motor in May 2022. He was the joint managing director until then. His elevation coincided with the appointment of Ralf Dieter Speth, a global automobile veteran, as the chairman of the company.
The company's extended collaboration with German auto major BMW in 2021 for joint development of new platforms and future technologies, including electric vehicles, has also enabled TVS Motor to gain strength in its aggressiveness in the marketplace.
Fastening its belt for a speedier ride, TVS Motor, between 2020 and 2022, acquired e-mobility firms like Switzerland's EGO Movement and Swiss E-Mobility Group. These buyouts were apart from UK-based Norton Motorcycles, a company TVS Motor acquired in 2020.
Spreading its wings, TVS Motor has in the last six to eight months forayed into a slew of additional overseas markets, France being the latest one. Currently, TVS Motor exports to over 80 overseas markets, African countries being the strongest ones.
TVS Motor's UK subsidiary, Norton Motors, which was acquired by the company some four years ago, is also getting ready to launch new products soon. The company is working on launching a whole range of EV products, including a e-three-wheeler, slated to be launched soon, following its successful electric two-wheeler christened IQube.
Acquisition Of E-Mobility Companies
TVS Motor acquired Swiss E-Mobility in 2022 to expand in Europe. SEMG is a market-leading provider of e-mobility solutions within the DACH region — Germany (D), Austria (A), and Switzerland (CH) — operating the largest pure-play e-bike retail chain M-way in Switzerland. The company has a prestigious Swiss mobility brands portfolio, including Cilo, Simpel, Allegro, and Zenith.
TVS Motor also bought out Switzerland-headquartered e-bike maker EGO Movement. The company combines designs with software and hardware and has an omni-channel network across Switzerland, Liechtenstein and Germany, with plans to expand across Europe.
Investments In Startups
Seeking to hand-hold startups, the company made investments in Singapore based Ion Mobility to further enable TVS Motor drive the premium electric-vehicle ecosystem. Ion Mobility is a tech and automotive startup, which delivers mobility and energy solutions to customers across southeast Asia.
The other major startup acquisition was of Killwatt GmbH. Killwatt is a privately held firm in Germany. Its business comprises development, design, manufacture, sale and distribution of products and components in the field of electric two-wheeler vehicles.
For TVS Motor, this acquisition aligns with the company’s larger vision of becoming a leading player in the e-personal mobility space. It also adds to the company's ability to provide customers sustainable mobility solutions, while complementing TVS Motor's other recent acquisitions. The company considers Killwatt a long-term partner to establish a strong presence in the e-mobility business.
Industry experts believe that investments by TVS Motor in startups will enable the company access to newer technologies, which in turn reduce the product cycle considerably.
The company's sales grew by 4% to 2.26 lakh units in Q3 FY24, which is better than the industry, K N Radhakrishnan, director and chief executive officer of TVS Motor, told analysts during the third quarter earnings call. The share of the company's premium product sales is growing and it will continue to invest to grow further, he said.
During Q3, the company announced its entry in the European market by signing a strategic partnership with Emil Frey, a 100-year-old enterprise. The company has plans to launch both internal combustion engine and EV products in select markets in the European Union. TVS Motor is prioritising countries with strong two-wheeler demand, coupled with existing Emil Frey infrastructure and resources, to build the distribution network.
Growing Export Markets
TVS Motor has footprints globally, including geographies like Middle East, Africa, southeast Asia, Indian subcontinent, Latin and central America. The company's total exports grew 85%, increasing to 98,856 units in February 2024 from 53,405 units registered in February 2023.
Two-wheeler exports registered a growth of 98%, with sales increasing to 90,308 units in February 2024 from 45,624 units registered in the same month the previous year.
When the company entered the Venezuelan market in October 2023, it was the first Indian automobile manufacturer to enter the market with a host of 14 SKUs for the enthusiastic riders of Venezuela, it said. In November 2023, it forayed into Vietnam. TVS Motor forges partnership with local dealers to penetrate into export markets.
Focus On EVs
TVS Motor, sensing a huge market opportunity in the EV front, has started exports in a bid to establish a global brand identity in the green mobility space. It has lined up a slew of EV products to be launched in the coming four to six quarters.
EV sales registered a growth of 16%, with sales increasing to 17,959 units in February 2024 from 15,522 units in February 2023. The company has earmarked a capex of Rs 1,000 crore for financial year 2024, most of which will go into EV product development.
As part of its planned complete EV product portfolio, an e-three-wheeler will be launched next. The company has four state-of-the-art manufacturing facilities in Hosur, Mysuru and Nalagarh in India and Karawang in Indonesia.
TVS Motor manufactures the largest range of two-wheelers, starting from mopeds, to scooters, commuter motorcycles, to racing inspired bikes like the TVS Apache series and the TVS Apache RR310.
Collaboration With BMW
Strengthening its long-standing partnership, TVS Motor and German auto major BMW Motorrad in October 2023 decided to go in for joint development and production of electric bike BMW CE 02 at the former's manufacturing facility at Hosur in Tamil Nadu, aiming to roll it out in the global markets. Under the initial partnership, forged 10 years ago, BMW has been designing and conceptualising the products and TVS Motor has been producing them at their facility.
TVS Motor and BMW produce five motorcycles — BMW G310R, BMW GS310, BMW G310RR, Apache RR310 and Apache RTR 310 — at the Hosur plant. TVS Motor and BMW Motorrad had extended the partnership in December 2021, covering EV products. In line with this, TVS Motor and BMW Motorrad are jointly developing new platforms and future technologies, including EVs.
Financially too, TVS Motor is on good footing. At the close of the April–December period of the current fiscal, the company's operating profit grew 19% to Rs 23,608 crore, as against last year's Rs 19,773 crore. And during the nine-month period, TVS Motor has already crossed last year's overall profit of Rs 2,003 crore.
The writer is a veteran financial journalist based out of Chennai.
Disclaimer: The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.
