TVS Motor, the country’s third-largest two-wheeler company, is mulling plans to set up a greenfield plant in China, though the company’s chief says it is not likely to happen in the near future.
“While some domestic automobile companies have been expanding their product ranges into new segments, our strategy (for growth) would be to expand geographically,” Chairman and Managing Director Venu Srinivasan told reporters at a meeting here on Tuesday.
Srinivasan’s comments come at a time when most rivals are ramping up their product profile. Hero Group, a partner in India’s largest two-wheeler company Hero Honda, had recently tied up with Daimler AG of Germany to set up a truck manufacturing facility in Chennai, while TVS Motor’s archrival Bajaj Auto has ambitions to manufacture ultra low-cost cars with the Renault-Nissan alliance.
Another recent development was when Mahindra & Mahindra, which has so far restricted itself to commercial and utility vehicles and passenger cars, had evinced interest in picking up a majority stake (76 per cent) in Pune-based two-wheeler company Kinetic Motors. One of the challenges that TVS Motor is likely to face is the regulatory compulsion in China to set up a joint venture with a local partner there to avail fiscal incentives.
In July 2007, TVS Motor rolled out its first two-wheeler (TVS Neo) from the new plant in Indonesia. The plant was set up with an investment of $50 million, which is expected to be doubled over the next three years.
TVS Motor hopes to improve its market share of the two-wheeler market to 16 per cent in the second quarter and possibly 18 per cent by the end of March 2009.
However, TVS Motor’s history in joint-venture arrangements has not been great. In 2001, the company severed ties with Suzuki Motor Corporation after a bitter spat. Following this, TVS Motor emerged as the third-largest two-wheeler company in the country. Suzuki restarted its India operations recently, but with with limited success.