In India, TVS Motor has found the sweet spot between product and pricing in a tough market for two-wheelers
two-wheelermarket is characterised by intense competition and sluggish sales.
TVSMotor Co has recorded above-average growth.
- This is largely due to the success of its newer models.
The market is also extremely heated -- incumbents are trying to outperform each other in terms of prices and product launches.
But one company, TVS Motor Co, has overcome these hurdles with relative ease, posting a revenue growth of 26% in the quarter ended December 2018. That is well above the industry average of 8%, according to the company’s FY19 estimates shared over a recent conference call.
The uptick is largely attributable to the Chennai-based motorcycle manufacturer’s improved product mix and a surge in export volumes, due in part to the rupee’s weakness and consolidation in markets like The Philippines, which it also serves.
The company has also been rolling out a number of new models -- the Radeon motorcycle, the Jupiter Grand and Ntorq scooters as well as the latest version of the Apache motorcycle, which was a play at the growing premium segment.
The fuel-efficient Radeon, in particular, was launched to meet the needs of commuters in rural India. Sales of the 110cc motorcycle, which currently clocks in 11,000 units a month, are expected to double, the company said on the analyst call.
Priced at around ₹50,000, it is also a value play for cost-conscious commuters between the age of 25 and 35. When compared to other popular mid-sized commuter bikes like the
While its other models fare well for different reasons: At ₹86,000, the updated Apache was priced below its immediate competitors in the premium racing category - The Yamaha FZ and
Meanwhile, its smart scooter brand, the Ntorq, which was launched last February and is priced at a little over ₹60,000, carries a premium as it also India’s first smart scooter, meaning it allows pairing with smartphones. TVS has reportedly sold over 20,000 units of the scooter per month in the second half of the year, according to Car Blog India.
Clearly pricing has been a strong selling point for TVS in recent months. However, going forward, it may be difficult to keep these products as affordable as they are. The company has already raised prices by an average of 0.9% between April and December 2018.
TVS may have to contend higher raw material prices and marketing costs to stay ahead of rising competition, which could potentially trigger a price hike or crimp margins. A government regulation mandating the installation of an anti-lock braking system that comes into force in April could escalate costs further.
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