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TVS reworks strategy for scooters - Views on News from Equitymaster
 
 
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  • Sep 20, 1999

    TVS reworks strategy for scooters

    In view of the lukewarm response to 'Spectra' (a four-stroke scooter), TVS Suzuki plans to relaunch it in January 2000 with a new look. It is also looking at other launches like the Scooty, a step through model.

    TVS Suzuki, incorporated in 1982, is a joint venture between Sundaram Clayton (TVS group) and Suzuki Motor Corporation of Japan. Along with Bajaj Auto, it is the only other company in the two-wheeler market with a presence in all three segments - scooters (1% market share in July 1999), mopeds (54% market share) and motorcycles (20% market share).

    TVS's diversification into scooters has not been very successful so far. It is the smallest player in the segment, with approximately 1% market share. Essentially, mopeds were always TVS's forte, and over the years it has built a reputation for itself in motorcycles.

    Till recently, scooters were an alien product for the company, and it made a foray in this segment by launching some two-stroke scooters that went ignored by consumers. Then it launched the 'Spectra' in the premium end of the segment, where demand growth was very sluggish. 'Spectra' failed to generate volumes and fared poorly against more popular brands from Bajaj Auto and LML.

    TVS needs to continue building upon its strengths in mopeds and motorcycles by launching new models and variants. If it wants to establish itself in the scooter segment, then it will need several models positioned in each category in order to compete with Bajaj Auto and LML, who have established models across all segments. Else it will also struggle to generate volumes and will fail to corner significant market share.

    Market view:

    Considering TVS Suzuki's healthy growth in mopeds and motorcycles in April-July 1999, analysts have rated it as a 'BUY'.

     

     

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