In what is touted as a ‘win-win’’ deal, Venu Srinivasan-led TVS Motor Company and BMW Motorrad, a part of the BMW Group (which has under its fold illustrious brands such as BMW, MINI and Rolls-Royce), have inked a long-term co-operation agreement to roll out ‘Made in India’ bikes in the below 500 cc category.
TVS Motors now makes bikes in the sub-250 cc category. BMW, on the other hand, operates in the 600-1,600 cc space.
TVS Motor and BMW Motorrad have made it clear that it is a “joint technical co-operation and manufacturing agreement’’ only to produce below 500 cc bikes.
No equity participation
Addressing a press conference here, Mr. Srinivasan asserted that the pact, announced here on Monday, envisaged no equity participation.
The newly-formed partnership provides for the use of the production facilities of TVS Motor to make these bikes under TVS as well BMW badges.
The co-operation agreement will see the two companies offer their own vehicle derivates manufactured in a common TVS Motor facility. However, these bikes will be sold through their distribution channels within the country, and across the globe. The bikes will be made either at Hosur or Mysore, where TVS Motor has facilities.
The Indian company will invest 20 million euro in this joint initiative, according to Mr. Srinivasan. The first product is expected to hit the market in 2015. “The agreement will bring together the expertise of both partners,’’ he added.
BMW Motorrad is best known for its technology, quality, reliability, and engineering perfection. TVS Motor's strength, however, lies in its ability to develop smaller bikes, offer mass production products, and ensure a robust supply chain.
Stephen Schaller, President, BMW Motorrad, informed pressperson that the pact with TVS Motor was in line with the conscious decision taken by the German company to re-align its focus, which, among other things, envisaged a foray into motorcycles below 500 cc. “This long-term co-operation is an important step along the road to profitability and sustainable growth,’’ he said. “Both partners will benefit immensely from this,’’ he added.
A market leader in 13 countries, BMW Motorrad has a range of 19 premium motorcycle and scooter models. The main production facility of BMW Motorrad is in Berlin, Germany. The Chennai-based $1.3-billion TVS Motor Company has an annual production volume of around two million units.
TVS Motor sold 61,808 motorcycles last month against 65,994 units in the same period in the previous year.
Shares of the company ended higher by Rs. 3.60 (9.93 per cent) at Rs. 39.85 on the Bombay Stock Exchange on Monday.
