EXCLUSIVE! BMW to link up with TVS via its Husqvarna brand?

The success of Austrian bike maker KTM hasn’t gone unnoticed in the European market. Especially by BMW which has been on song for the past few years with its range of superbikes, traditional boxers for road and endurance plus also its tourers and custom bikes. However, the era of large capacity, hyper machines seems limited though very profitable but it will stay concentrated in the developed world with next to no worthwhile movement in the large mass motorcycle markets of the world. Read that as Asia, South America and Africa where motorcycles are first the main means of personal mobility for work and utility plus commuting and then tools for pleasure and performance.

And just like KTM has taken the India route to success and volumes, BMW has been exploring this route as well though it has as yet to come up with its exact game plan. However, there is a subtle difference between KTM and BMW in their India approach. Bajaj Auto has been a strong investor-partner in KTM and in fact brings a lot of its low cost yet hi-tech manufacturing ability to the table. The Indian firm is already the world’s third largest bike maker by volume, the most profitable as well in the industry and to top it all has a terrific product development programme underway with technology and skills sets it has developed over the last decade and a half.

German bike maker BMW acknowledges what has to be the mantra to do the volume business and still stay relevant with its big bikes and that is to have a presence in Asian nations like India, China, Indonesia, Vietnam and Thailand. Trouble is it has no bikes less than 650cc of engine displacement and its scooters are way too trick and technologically proficient to be sold at prices prevalent in Asia. The obvious thing then is to set up an Asian base, preferably with a well established bike maker in the region to make a slew of small capacity machines ranging from 125cc to 250cc straddling various segments of the two-wheeler market.

For this to work India seems to be the right hunting ground and while many will think Hero MotoCorp would have been the logical first choice, the obvious nameplate which can meet BMW’s objectives and turn them into a win-win situation would have to be TVS. The Hosur-based bike, scooter and moped maker (it also makes three-wheeled autorickshaws) is renowned for its engineering and low cost manufacturing skills. If that’s not all, it has a penchant for quality which would help tick many boxes in BMW’s checklist as to what a potential partner might need to sport and the overall prognosis seems pretty clear, BMW needs TVS more than I think TVS needs BMW! One can term this as an inane expression but there is pretty strong substance to this as will be made clear going ahead.

In a recent interview to the German edition of the Financial Times, Hendrik von Kuenheim, president of BMW Motorrad, said that the future for his firm’s two-wheeler business was to foray into new virgin markets – for the brand. This would happen, he said, with an all-new perspective and product range using local manufacturing to slash high production costs and eliminate the high import duties normally prevalent in most Asian countries which protect their local industry. While BMW doesn’t make small capacity machines even though it had done so in the past, its present success is all down to its techno-laden big motorcycles and getting low down in the mass market price-oriented segments would devalue the BMW brand.

Thankfully the solution is also within the firm itself and it comes in the form of the Italy-based former Swedish bike maker Husqvarna which BMW bought some years ago from Claudio Castiglione of Cagiva. Husqvarna, like KTM, specialises in on-/off-road dual purpose machines and notably is also in the same competitive space as KTM in world enduros, moto cross and what have you. BMW has been increasingly pushing Husqvarna to acquire a slightly higher profile than what is presently only known to enthusiasts and diehards in the two-wheeler sphere. Further, with Husqvarna having seen sales slide in the European price conscious starter markets in Italy, Spain and Portugal that have slumped year on year, it knows that if it has to get up to 50,000 units per annum from the present 11,000 plus it needs to do the business in Asia with a different business proposition altogether.

And this has seen many visits by BMW top brass to factories across the region and it has paid visits to Bajaj Auto, Hero MotoCorp, TVS and it was the latter which von Kuenheim spoke glowingly about. “TVS Motor were by far the most professional, with the cleanest production line in India – you could have eaten off that floor! They build their engines in a clean room like they have in Formula One where the room is pressurised so that it is dust free, all for a small 125cc engine that is built 2,000,000 times a year.” It didn’t end there for von Kuenheim continued heaping even more praise of all what he saw and felt and recognised: “They are very committed, and very good. Some of them even speak German!”

The big driver for BMW’s mass market motorcycle aspirations will of course sport the Husqvarna brand and this can be taken to developing a whole new range of sporty small tiddlers ranging from 125cc to 250cc and get those volumes which mean will contribute much to the top and the bottom lines of the balance sheet. The KTM – Bajaj Auto partnership has shown that it can work and that Indian bike makers have that capability to deliver while looking to the big picture always. Another detail which might have spiked BMW’s move to look at getting into the volume game globally is to do with many needing a simple basic product for fun and pleasure at a relatively competitive price. Ducati have already started in Thailand with a mix of locally manufactured components wrapped around its venerable vee-twin engine shipped from Italy. I am sure that under Audi’s patronage, we could get to see a new range of small capacity machines designed and developed by Ducati but sold under a different brand name -  and as is known to many, the VW Group is the custodian of such great German motorcycle brands as DKW, Wanderer, NSU. Need I say more?

Also another intriguing part of the fascinating European bike makers eyeing Asia story is Triumph, the reborn British bike maker. Triumph has already announced a move into India to start with assembly using CKD kits sourced from Triumph’s factories not just in the UK but also Thailand but there is even more action afoot within Triumph which might have hastened BMW to move with alacrity. It is no secret that Triumph is developing a modern yet single-cylinder engine to be made in capacities ranging from 250 to 350cc (the KTM Duke and the Bajaj Pulsar portfolios will also sport all-new 350cc single-cylinder engined bikes by end-2013, early 2014). Using this as the building block, Triumph aims to make a range of machines which can be made to work across various spectrums of the emerging Asian ‘big’ bike market to take on the likes of the KTM Dukes on one hand, the Bajaj Pulsars on the other and the Honda CBR250R on another. If that is not all, Triumph might also venture forth into other segments where the lightweight and the strong build will make for sensibly priced high profit, high volume machines to be made in India, Thailand and hopefully also the UK (this latter being a reverse flow of CKD kits!)

The writing is clearly on the wall and though BMW has spoken of its intent, TVS has as yet to say anything on this matter which is clearly developing even as we speak. That some of the TVS lot speak German is a good starting point for BMW but one giveaway is already clear – after Bajaj Auto inked the deal with KTM, the racing department of TVS jettisoned their specially developed motorcycles which had quite a bit of KTM and Engines Engineering in them and the latest bikes are all Husqvarnas in the blue, white and black livery of the Hosur-based bike maker. Coincidence or happenstance? There’s more than what is apparent at the moment and a tie-up with BMW could mean a terrific boost to the fortunes of TVS, India’s fourth largest two-wheeler player. On top of that it can play a role via some of its best dealers across the country to set up a premium sales channel to handle BMW’s CBU bike sales and nullify some of the bragging rights which its rivals have at their disposal. Also given its innate ability, there shouldn’t be any reason why TVS can’t come up with its own rivals to the Duke and the Pulsar should it have the technological might of BMW by its side.

Watch this space for sure in the coming months!