Taking Another Ride

TVS Motors re-launched the Victor brand earlier this year to enter the lower executive segment in the motorcycle market. Its market share has taken a bit of hit from FY10 to FY15 (slipping from 6.7% to 6.2%). In FY16, the company saw a marginal recovery with market share improving 44 basis points to 6.65% according to SIAM data for domestic sales. In the pecking order, TVS Motors remains at the 4^th spot.

But, there is uncertainty on whether the Victor re-launch in a highly contested segment would shore up the market share of TVS Motors. For starters, the lower executive segment itself is shrinking. Over the last five years, the share of lower executive bikes has shrunk from 35% to 24%. Most of this segment’s market share has been eaten up by scooters which now account for 31% of the two-wheeler market from 19% in FY12.

“Customer preference is shifting towards the less complex gearless scooters. Also, people are looking for vehicles that can be used by multiple users. Multiple people in a family can use the scooter as opposed to the motorcycle. The preference in the urban market and slowly in the rural market as well is changing,” says Abdul Majeed, partner and national auto practice leader at PricewaterhouseCoopers.  

Another challenge for the 110cc Victor is going to be the strong demand for more powerful bikes in the market. Compared to other segments, the 125+cc segment has seen the fastest growth of 33% YoY in the month of July. Meanwhile, the segment has already got well-entrenched players. Hero accounts for more than 80% of the market share with Passion and Splendor. Honda’s Dream has 14% of the segment.  

While the Victor brand today has it task cut out, this was not the case when the brand was launched in 2002 to roaring success. TVS and its Japanese partner Suzuki had announced their separation in the last week of September, 2001, close on the heels of TVS Victor launch. The Victor brand became the first four-stroke 110 cc motorcycle in India that was designed and manufactured indigenously.  

Victor established TVS Motors in the motorcycle space. “The success of TVS Victor laid the foundation for TVS Motor in India. Victor soon became the top selling brand in the country selling 40,000 units each month then,” says Arun Siddharth, marketing head – motorcycles, TVS Motor, in an emailed response.

“The launch was a huge success. We had a massive waiting list. And that is when we had to make some calls i.e. whether we invest further in capacity and then how do we ensure that the demand is sustained. We decided to ramp up the production from 25,000 units to 45,000 units a month and then signed on Sachin Tendulkar as brand ambassador,” recalls one marketing executive who was part of the team when Victor was launched.

By early 2003, TVS Motors had garnered market share of 21% in the executive segment. The Chennai-based firm had pipped Bajaj Auto to the second spot in the executive segment even as Hero Honda maintained it leadership position of 49%. This was a time to develop the brand and launch new variants of Victor to keep the brand popular among customers. However, delay in launching new Victor variants and management’s focus on other brands (Centra launched in 2004, followed by Star and Apache), affected the Victor brand. The first Victor brand variant was the Victor GLX 125 cc that was launched in 2004.  

To add to this, the overall executive segment was seeing slow sales growth (from 56% MoM in May, 2002, to 10% MoM in month of February) with Bajaj Auto’s Pulsar drawing customer’s attention to the premium category. In 2007, Victor was discontinued. In March, 2007, TVS Motors had just 5%-7% of market share in the executive segment.   

Unlike TVS, Hero has stuck with its popular brands viz. Passion and Splendor and that strategy seemed to have helped Hero in the executive segment. Today, Hero accounts for the lion’s share in the executive 100 cc segment with market share of 81% as on 1QFY17, while in 110 cc – 125 cc, the company accounts for market share of 46%.

A small dipstick study showed that the trade is not so willing to push TVS products. Certain dealers in the city were puzzled and asked why are you looking to buy TVS product? Another dealer shared that even though he makes higher margins on TVS products, he doesn’t want his customers to be disappointed and so he doesn’t recommend TVS products. The problems they cited were the issue of spare parts, higher maintenance-related costs and the availability of TVS service centres in the city.

Majeed at PricewaterhouseCoopers feels that while some companies might be strong in South, some in West or some in North, it is essential for companies to have a seamless after-sales service center network from rural markets to urban markets. “When people buy vehicles they want to make sure service points are available for after-sales or to find spare parts,” he says. Under the current circumstances, TVS Victor is set for an uphill ride.