President of TVS Motor Company discusses his strategy for sccoterisation in rural India and the promise that comes with the new Apache RR310.
With a set of premium products, both sporting advanced technologies and the company's racing legacy, TVS Motor Company seems to have entered a new phase and a revised outlook as an OEM.
In an exclusive interview, the company's president K N Radhakrishnan talks on how the growth story could unfold in coming times.
It appears that TVS Motor has entered a new phase with the RR310, trying to take the premium route for growth. How do you plan to take the story forward?
At TVS, we always believe in delighting the customer. First is to engage with the current customers; they should feel that we are adding value. So we looked at all of our products. We looked at giving them the best-in-class quality, best-in-class appeal, and always offering durability and reliability in almost all products. So, this was some kind of a phase.
Then we built the range. The motorcycles were the Sport, City, then the Victor and Apache (160,180,200cc). It was the same way in scooters. First came the Scooty, then the Wego and the Jupiter for the mass market. In between, we had the Scooty Zest to strengthen the Scooty brand.
Over the past few years, we have started focusing on the young customers, because they are going to really take their aspirations ahead. And if we start meeting their aspirations, what is going to drive the next wave of business and performance?
The RR310 is the first product which is coming out of that. But much before that, Apache has been a very strong brand, built on the TVS racing pedigree, and really focused on customers who wanted that feel of racing. The RR310 is building on that and it’s the first time that we have ventured into the super premium segment.
While we did that, we also knew that the scooter category in India is now one-third (of the two-wheeler industry) and that's large. Just a few products to cater to that 35 percent is impossible. So we looked at what can be the next type of product. There too, we are able to see many customers who are very aspirational, who want performance, who want to make a style statement, want a lot of features, and sometimes a connected vehicle too. So, this thinking has culminated in the TVS NTorq 125.
So, the percentage of models catering to young India would now increase in TVS?
With Apache, we are already able to get more and more young customers. Now with the Apache RR310 and the NTorq 125, my belief is that we will get more young customers. That proportion would go up. Also, there are older people with a young mindset, I consider them as young customers too. To me, age is just an indicator. I have seen many people who are very young but they talk like grandfathers, and there are many grandfathers who are able to connect with gen Z. They are so connected and very young in their thinking. So, while the Apache is focused on young customers by age, it is also for those customers who are young in their thinking.
The midsize motorcycle segment (250-500cc), dominated by Royal Enfield, is a strong phenomenon now. How do you plan to tap that rising wave?
I think full credit is due to them for the manner in which they have marketed Royal Enfield. In the last 2-3 years, there’s been much growth in the number of riding clubs; while many customers take weekend rides, many are taking up riding as a hobby. This is what is going to drive this set of the market.
KN Radhakrishnan with Sudarshan Venu, joint managing director, TVS Motor Co, at the launch of the Apache RR 310 on December 6, 2017.
I am proud that Apache is gaining more and more market share. So you have to come up with delighting customers with new models or upgrades with features and stand to gain market share.
Does that mean there will have more TVS models in that segment?
In my opinion, we need to have models constantly, either a refresh, an upgrade or a new product. We have to constantly do that innovation work because innovation is the only thing which customers like. A customer wants to be different and does not want to be status quo.
Many OEMs are looking to cater to the young crowd but sometimes a company's strength/image in a particular segment, like commuter two-wheelers for example, may pose a challenge for it to be accepted as a maker of premium/aspirational vehicles. Has TVS faced any such challenge?
I am not too sure because before we came up with Apache 180 and 200, we had a commuter range of quality motorcycles and some good-quality scooters. When we started Apache, we started differentiating, saying, "This should set focus on a certain kind of customers who are unique, young, and who need that racing experience." We never faced any headwinds from customers about being a commuter two-wheeler producer that focuses on the common man or a family being unable to make an aspirational brand like Apache. In fact, the more and more we are able to make Apache, the more and more we are able to now make the Apache RR 310, and maybe the NTorq. Consumers will start appreciating the company as long as they are connected to the customer.
TVS showcased some concepts around electrified two-wheelers at Auto Expo 2018. How are you preparing for mass-scale electric mobility?
We are investing in all those technologies which are going to make India green – be it ethanol, electric or hybrid. At this point of time, I don’t think anybody could put a number to it. The best way is to invest, come up with products, do some improvements, and get more feedback from the prospects. That’s the way you try to improve the proportion of the new technologies.
Along with the electric scooter concept Creon, you also showcased a hybrid motorcycle concept. Is TVS looking at both scooters and motorcycles for electrification?
Those are all conceptual thinking at this moment of time. Which one and in what proportion, it’s very early to comment.
On the scooter front, there are some projections that by 2020, scooters could be 40 percent of the domestic two-wheeler market. And, if there are no major disruptions in the industry, then possibly 50 percent too in the near future. What is your outlook?
I don’t want to put a number but I feel scooterisation and scooter growth will be faster in the two-wheeler industry. Whether 40 or 50 percent, I don’t want to put an estimate. But, will scooterisation continue to be faster than motorcycles in the next 2-3 years? Yes.
The alliance with BMW Motorrad has gotten off to a good start and seems to be offering mutual benefits. What is the scope of that alliance?
It is a long-term relationship. I may not be able to divulge anything more on it at this point in time but I think these are two companies with similar philosophies and good engineering strength. I am extremely happy about this association.
With the Apache RR 310, the sports bike positioning is the strongest so far. It also seems to be a challenge to the Pulsar's positioning as the No. 1 sports bike brand.
I don’t want to comment anything about the competition. They have a strategy, they have done good work, they want to continue with that. But I am of the view that Apache is uniquely positioned, it has got certain characteristics of racing, it is loved by a certain type of customers. And we get encouragement from our customers. So, we will continue to invest and grow that category and in the process gain volume, and grow Apache as a brand.
Is the contour of the two-wheeler industry set to see some major changes, with scooters increasingly gaining ground and sub-segments of motorcycles emerging?
More than anything else, I think it is because of the economic cycles that we have seen. Last year for example, the rural market was slow, there was the demonetisation, BS III/BS IV and GST changeover; I think the most affected was the rural market. The monsoon was also poor. But this year I think the rural economy is slowly coming back.
In the recent Union Budget, a lot of initiatives have been taken by the government. Rural is the strength of India. So I am of the view that more than scooterisation or any other reason, I think if rural India starts picking up, it is good for all of us.
(This interview was originally published in the 1 March 2018 issue of Autocar Professional)
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