New Delhi: Automaker TVS Motor Company maintains a cautiously optimistic view for the India business during the fiscal 2023-24.
“For fiscal 2024, GDP is expected to be around 5.5% by various sources. Despite the difference in the specific forecasts, the general agreement is that India’s GDP growth will remain highest among major economies,” Ralf Speth, Chairman, TVS Motor Company, told the shareholders at the 31st Annual General Meeting (AGM).
“I am convinced that India can benefit from major shifts in the geo-political, geo-economical, and social landscape,” he said.
Speth noted that the rural recovery continues to be slow, which significantly impacts the growth trajectory of the economy. “El-Nino arriving early and affecting monsoon may lead to a weaker performance of the rural agricultural sector impacting the already weakened rural demand. Hence, the pressure on domestic moped and the economy motorcycle segments may continue.”
However, the company remains positive about the performance of the premium motorcycle and scooter segment due to improved urban demand.
According to Speth, factors like pickup in urban discretionary consumption demand, improvement of consumer sentiment, moderation of global crude oil prices and the introduction of tax reforms leading to higher consumption driven by the availability of increased disposable income, will play a key role in determining company’s performance.
For the premium play, TVS is building premium sales and service experience centers for its customers across 500 dealerships in domestic & international markets. It believes that “community building through immersive consumer experiences will be crucial in moving the needle.”
Electrification path
TVS stated that the electric two wheeler industry clocked strong sales of 7.18 lakh units in FY23, marking a growth of about 2 times over FY22.
Speth said as the EV industry is slated to grow rapidly, the company has robust plans for this segment. “TVS will launch desirable, new products with latest technologies in electric or electronic architectures and high energy efficiencies. The PLI and FAME-II initiatives of the government will be fully leveraged by TVS to strategically build a sustained dominant play in this segment.”
“The heightened consumer interest is driven by the alluring ‘Total Cost of Ownership’, digital-first technology propositions, the FAME II and PLI support from the central government combined with state-specific support that EVs offer. If consumers consider increasing fuel prices, EVs are even more attractive,” he said.
The two wheeler maker, which sells the iQube electric scooter in the market, clocked sales of 97,000 units in FY23, up from about 11,000 units in FY22.
Speth noted that as electric mobility gains momentum in India and other countries, it will prompt disruptions and structural shifts in the automotive industry.
As per the company’s partnership with BMW Motorrad, the automaker will be working jointly on design and development of EVs for the global markets.
Rising high on acquisitions, TVS has stakes in emerging companies including EBCO UK, Drive X Mobility, ION Mobility, amongst others. With its acquisition of Swiss E-Mobility Group (SEMG), TVS aims to leverage the opportunity to expand the core product range into adjacent segments with electric bicycles, including e-kick scooters and e-cargo bikes, which are emerging trends.
The automaker said it has set up a dedicated EV team to rapidly transform into electrification, ramp-up the direct and indirect product pipelines – and to offer its Indian tested, most reliable products internationally.
Export outlook
Key export markets of TVS Motor are impacted due to forex shortages, inflation and high interest rates in the backdrop of existing geopolitical strife.
The company expects the export of two wheelers would see a gradual recovery after the weak performance in FY23. “The Africa market is expected to improve with the moderation in inflation due to easing of monetary tightening globally. Expansion programs in LATAM, ASEAN and the Middle East will add further momentum,” Speth said.
