For the first time in its history, German auto major BMW is getting into the sub-500cc motorcycle market globally in collaboration with Chennai-based two- and three-wheeler maker TVS Motor for a "strategic realignment".
TVS and BMW Motorrad, the motorcycle division of BMW, have signed a "long-term" technical agreement to jointly develop, engineer and manufacture a range of sub-500cc motorcycles. The new premium motorcycle range will come with two distinct variations in specs — one badged BMW to be sold by BMW in India and globally and the other badged TVS to be sold in India and any global market that the Indian company wants.
For the moment, there is no equity stake involved. TVS chairman Venu Srinivasan indicated that the company will invest 20 million euros earned from internal accruals in the project. BMW Motorrad president Stephan Schaller declined to comment on product development investments.
The tech tie-up will offer BMW products in a new category which will help garner growth in emerging markets like China, South-East Asia and Latin America.
"We will introduce this new premium series in both our home markets in Germany, France or the US as well as emerging markets like South-East Asia, China, Brazil and India," Schaller said. "We are committed to profitable growth and in our existing range we are among the top two or three in the world. So, additional growth can only happen in the lower cc range," he added.
For TVS, the tie-up will offer products in the 250cc category where it isn't present right now and a technology rub-off across its manufacturing line-up. The products spawned by the tech agreement would roll out in 2015. "BMW's technology and quality standards are significantly higher than anything we have seen and there will be a direct rub-off on our engineering and tech expertise and an indirect rub-off on the whole system in TVS," Srinivasan said. The new range will be manufactured in one of TVS' current facilities — either Hosur or Mysore — although there will be additional investments in tooling, machining and manufacturing of certain parts.
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