Will TVS Dazz(le) Indonesia with its new launch?

Automobile, Viewed [ 60 ] , Rating :
Star Live 24, Star Live 24
Monday, July 29, 2013
Published On: 10:15:23 AM
Will TVS Dazz(le) Indonesia with its new launch?

With the launch last week of a new model motorbike, the Dazz, two-wheeler major TVS Motor is hoping to change its faltering fortunes in Indonesia.

Indonesia is the only country outside of India where TVS has a manufacturing facility. Over the last five years, the company’s Indonesian plant has churned out around 100,000 units, but is set to ramp up production, with a target of 50,000 units for the current financial alone.

But, this is just a speck on the vast two-wheeler filled horizon of the world’s third largest market for motorbikes. Constant traffic snarls, lack of affordable public transportation, and a burgeoning lower middle-class have meant that the Indonesian two-wheeler market has been witnessing double-digit growth for the last few years.

Bank financing

Last year was an exception, since new rules in bank financing for two-wheelers (85 per cent of bike purchases are bank-financed in Indonesia) doubled the down payment asked of borrowers. Even then, a total of 7.06 million units were sold, an indicator of the exuberant consumer market in Southeast Asia’s largest economy.

Market leader Honda sold over four million motorcycles in 2012, while number two player, Yamaha, accounted for almost 2.5 million. These two Japanese heavyweights dominate 92 per cent of the local market.

'Given the Japanese stranglehold, it’s certainly a challenge for newcomers like us,' says R. Anandakrishnan, President Director of PT TVS Motor Company Indonesia. With a $150 million investment so far, TVS’ Indonesian outfit is yet to turn a profit, or even break-even.

TVS set up shop in Indonesia in 2007, a few months before Bajaj, its only Indian competition on the archipelago. It was immediately clear that the local market was a beast of a different nature to the Indian one.


To begin with, in Indonesia, the two-wheeler market is entirely gender-neutral. 'Almost every bike here is used by the whole family, including the women and men,' explains Mr. Anandakrishnan.

Indonesia might be the world’s most populous Muslim country, but when it comes to gender empowerment, it trumps India with a female labour force participation of well over 50 per cent (compared to 29 per cent for India).

As a result, the models that TVS manufactures here are smaller and lighter, with step-through frames, which don’t require the rider to straddle the vehicle. Moreover, 64 per cent of the market is dominated by what are locally called matics, two-wheelers with around 110-cc engines, whereas this category of product makes up only 23 per cent of the Indian market.


Consequently, TVS decided to manufacture models exclusively for the local market rather than replicate its Indian models.

The company also exports around 50 per cent of the vehicles manufactured at its Indonesian plant to other Southeast Asian countries, the Middle East and West Africa, where the gown-like local attire also makes step-through frames popular.

Although taking on the Japanese, who have been in Indonesia for decades (in Honda’s case, 60 years), is a tough task, TVS is competing, in part, on price. It offers products that are 10-12 per cent below those of the Japanese, (in the case of the newly launched Dazz, the price is 30 per cent lower). But, the company is also making sure that price is not the only factor.

Mr. Anandakrishnan recounts how Chinese manufacturers came to Indonesia in a big way in 2002, offering bikes at a 60 per cent lower cost than the Japanese. For a year or two, they were hugely successful and managed to capture almost 20 per cent of the market. But within four years, they had faded away into oblivion.

Brand-conscious market

'The Chinese have a terrible reputation in manufacturing here, and no brand value,' explains Mr. Anandakrishnan. Indonesia is a notoriously brand-conscious market, largely driven by social media activity. There are, for example, 29 million Indonesian users on Twitter.

India, on the other hand, does have a solid engineering reputation. Ironically, this is, in part, due to TVS archrival Bajaj. Bajaj’s three-wheeler vehicles have been dotting Jakarta’s streets since the 1970s, and are now city icons, where they are simply known by their brand name of Bajaj.

'At the start, we did not want to highlight India in our marketing,' says Mr. Anandkrishnan. 'Our main message was that we are in 55 countries in the world.'

This has now changed, with the realisation of India’s positive reputation. The new TVS tag line, repositions its bikes with 'Motor India, Kualitas Dunia,' or 'Indian Motorbike, World-class Quality.'

There has been some talk of the possibility of TVS deciding to close down its manufacturing plant in Indonesia if the Dazz fails to dazzle. But Mr. Anandkrishnan begs to differ. 'We are here for the long-term, and it’s normal to take losses in the beginning.'

Courtesy : The Hindu

Other Videos

 Comment Note: By posting your comments in our website means you agree to the terms and conditions of
More From This Section

Related Search
  • Automobile
  • Economy
  • Interview
  • Markets

> >


Most Viewed