Reeling under pressure of declining sales volumes and a dip in market share, India's third largest two-wheeler maker, TVS Motor Co, expects a turnaround in its fortune with a slew of launches in the next fiscal.
The company, which reported 40 per cent decline in motorcycle sales during April-December 2007-08 period, sees annual sales growing to touch the 1.7-million units mark in 2008-09.
"Lack of finance availability, especially in B and C towns has led to a decline of 12 per cent in the overall motorcycle market during the current fiscal. The decline is more pronounced in the entry level segment, which slipped nearly 25 per cent. TVS has up to now been largely dependant on this segment and has therefore felt the pinch," TVS Chairman Venu Srinivasan told reporters in New Delhi.
The Chennai-based firm is now banking heavily on its new executive segment offering, 125 cc 'Flame', to revive sales during the last quarter of this fiscal. It expects to sell 40,000 units of Flame in January-March period. The bike has been at the centre of a storm with rival Bajaj alleging the company of infringing patent, for which the two companies are fighting it out at the court.
He said the company would be launching a slew of products including a scooter, two motorcycles and three-wheelers in the coming few months to revive sales in the next fiscal when it plans to put out as many as 1.7 million vehicles on Indian roads.
"We expect to sell a total of 1.4 million vehicles in 2007-08 against 1.5 million units in 2006-07," Srinivasan said. He added that due to a decline in overall sales, the company is also expected to take a hit of 4.1 per cent in its top-line during 2007-08 at Rs 3,700 crore (Rs 37 billion).
The company had closed the previous fiscal with revenues of Rs 3,860 crore (Rs 38.60 billion).
In two-wheelers, TVS would first roll out 'Flame' pan-India by February, which would be followed by a new variant of 100 cc 'Starcity' priced at Rs 32,000 (ex-showroom), a fuel injection variant of its 160 cc bike 'Apache RTR' and a new scooter later in the year.
TVS is also planning to launch its LPG, CNG and petrol powered three-wheelers during the current calendar year, which is expected to boost sales further during the next fiscal.
Two-stroke three-wheelers would be the first to hit the market by end of this month, followed by four-stroke models in April. "These new launches should help us in clocking sales of 1.6 million units in the next fiscal and an additional 100, 000 units in the overseas market," Srinivasan said.
He said of the targeted 1.6 million units, nearly 8.5 lakh would be motorcycles, while the remaining volume would come from scooters and three-wheelers. The company also plans to sell 75,000 motorcycles in Indonesia, where it operates out of an assembly unit.
The company, however, would register a 22 per cent dip in its motorcycle sales during the current fiscal at 700, 000 units against 900, 000 units in the previous fiscal but does not expect the decline to drastically affect total sales in 2007-08.
"The dip in motorcycle sales would be negated by better scooter and moped sales. We had made mopeds readily available, which worked well for us."
TVS is looking at adding geographies to boost sales over the long-term and other than Indonesia, it is also looking at expanding footprint in South American markets over the coming few years. The company expects to sell one million units in the overseas markets in the next three years, with the total sales volume (including domestic market) touching four million units per annum.
"We expect to sell nearly four million units in the next three years of which nearly three million would come from the domestic market while the remainder would come from overseas markets. Our overseas sales might not necessarily be exports as we may start assembly operations in other countries," Srinivasan said.
TVS plans to start test marketing a CNG powered 125 cc bike based on Flame from September onwards. The bike is expected to be 40 per cent more cost effective over the conventional petrol powered bikes.
"We are presently working on a CNG powered 125 cc bike based on Flame. The bike, however, would be lesser powered than the Flame but would help in cutting down operational costs by as much as 40 per cent. It would be test marketed in Delhi and Gujarat from September onwards," Srinivasan said.
On the ongoing spat with Bajaj, Srinivsan said TVS had a strong case and was confident of emerging victorious.