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Stephan Schaller looks puzzled when asked about his company’s first India outing.
The President of BMW Motorrad has little idea about the 650cc Funduro which was part of a joint venture with the Hero group in the 1990s. The bike cost a whopping Rs 5 lakh and, quite predictably, sank without a trace in a market where the Maruti 800 was less than half this price.
Schaller is clueless about this brief history of BMW in India’s biking arena. Today, he has bigger things on his plate which involves driving an important vision jointly with TVS Motor. The two companies recently announced to jointly make sub-500cc bikes in India to be sold worldwide.
This is a big step forward for TVS Motor as the alliance will bring into its system the best in technology and manufacturing processes. The fact that a top global brand like BMW has chosen it as an ally is a tribute to its plant quality systems.
As a result, TVS can now access the best in technology and R&D for its two-wheeler operations. In other words, the marketing end will have to gear up and capitalise on the BMW brand equity association to plan its strategy.
According to a top official, an important aspect of this partnership is the fact that it revolves around ‘coopetition’ which (according to Wikipedia) is co-operative competition to reach a higher value creation. It is a model that is not uncommon in the West where fierce rivals in the car industry team up for specific programmes but still compete in the market.
TVS Motor and BMW, likewise, have a common goal which can only be achieved if they jointly pool in their skills of high technology and competitive costing. The latter is well too aware that sub-500cc bikes are the best way forward for emerging economies such as Asia, Latin America and even Africa in the long run. Europe and the US can also be part of this landscape as the KTM-Bajaj Auto alliance has shown with low capacity bikes.
“The fact that the first bike is not due until 2015 pretty much reflects the rigour that will go into the exercise,” the official says. TVS Motor and BMW will sell products under their own brands without precluding the other from entering new markets. As a result, the duo will have enough flexibility and breathing space.
KTM-Bajaj Auto
Observers believe that India is poised to become the global powerhouse for the two-wheeler industry. Not only is it the largest market in the world, ahead of China, but the ideal destination to strike the best balance between costs and quality.
This was what prompted KTM to use its equity partner, Bajaj Auto’s Chakan facility near Pune to make bikes for global markets, including Europe. The next batch of Duke 390 motorcycles will now find their way into the US.
KTM knows that low-displacement bikes will be increasingly sought after, not only in emerging markets but also traditional strongholds in the West. Similarly, in the case of BMW, the focus on sub-500cc bikes reflects a strategy that combines de-risk and growth.
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