SUZUKI MOTORCYCLE INDIA PVT. LTD.

[A]

TVS Suzuki

TVS Suzuki was a 17 year old joint venture between TVS and Suzuki. In 1984, Suzuki came together with TVS for the production of 100cc motorcycles under the name of Ind-Suzuki. Subsequently in the moped division was bought by Ind-Suzuki Motorcycles in 1987 and the company changed its name to TVS Suzuki Ltd. Suzuki was to provide technical assistance to TVS. Even though TVS had a wide range of products for offering including mopeds, scooters and motorcycles, the Suzuki collaboration was for the Motorcycles only. Soon sales started to pick up and the models were an instant hit.

The Max-100 motorcycles were very much success and reliable, so much that these motorcycles formed a base for further development of products for the company. In late 1990’s the company posted losses for the first time. Automobile analysts remarked TVS Suzuki’s products lagged behind in performance and fuel efficiency when compared to the other companies. A year later company lockout due to labour problems and it got a ‘practically sick company’ image. In 1992, a turnaround strategy was formulated. TVS-Suzuki then introduced five new models all of sudden which including Supra, Supra SS, Shogun, Samurai and Shaolin, which was India’s first 5speed 140cc motorcycle.

Aggressive marketing strategies were used and Special attention to skill development of managers, sales officers and service engineers were given. Number of Dealership outlets was reduced from 400 to 250. The move off and the company succeeded in making a turnover of Rs. 4.1billion and a net profit of Rs.300 million in the year 1994. It was a remarkable road of recovery. Soon the company rose to sparkling heights and was in close competition with Hero Honda. TVS-Suzuki was now India’s Second Largest two wheeler manufacturing company. Somewhere in the midst of the turnaround, Differences between the two surfaced up.

TVS accused Suzuki of creating roadblocks in the management and also strongly resisted the launch of Samurai and Shogun, both of which proved to be successful. Moreover Suzuki refused TVS, more funds and technology for new models to keep in pace with the competition.” Everything without exception had to be approved by Suzuki” said a TVS spokesman. “Joint ventures are like long-term friendships. They go through ups and downs.

Changes in circumstances and expectations may cause tensions in the joint venture. But if you have a robust working relationship, whatever be the tension, you don’t go and shout from the rooftops. You keep negotiating, fighting internally, hammering it out and finally arrive at

something that both can live with.” said Mr Venu Srinivasan, Managing Director of TVS-Suzuki, in an interview for Business Line, in 1996, when asked about his experience of working in a joint venture and reports of tension among the partners.

Soon the official version came out in public. It is said that Suzuki Demands were VETO Rights over aspects of management and in Decision-making process, Restrictions on Exports, Conditions to restrict use of Local Components, Compulsory Import of all Dyes and Capital equipments from Suzuki and Payment of Royalty for an indefinite period. TVS Straight-away resisted all of these demands. The Government decided not to interfere in the issue and soon TVS-Suzuki witnessed Huge Decline in sales. The Indian Motorcycle segment shifted four stroke models and TVS-Suzuki lost out on Huge Demand.

Then Suzuki expressed desire to increase the Equity holding and in August, 2001 they entered an agreement with Kawasaki for Product Development, Design Engineering and Manufacturing. TVS saw this as a direct conflict of interest. And finally in September, 2001 TVS-SUZUKI announced their breakup. TVS bought the 25.97% stake of Suzuki for Rs.90 million, increasing its stake to 58.43%. The stylish 150ccc Fiero was the last product of TVS-Suzuki. It was a celebration time for other companies as the company with Suzuki’s omission didn’t seem to head anywhere and TVS will prove to be a weaker company in the years ahead.

The Suzuki Motorcycles abandoned all its operations and left the country only to renter India five years later. From there on, they have been on a slow and steady course and are working towards building a good company image. Maybe the fact that Suzuki brand has a major customer recall as a car maker could help in bringing customers to its showroom.

Recently they launched a wide array of their international motorcycles including the prestigious Hayabusa, Gixxer 1000 and Bandit. As of 2010, the company seems to travelling on a positive track and has seven products on the offering. Looks like Time has changed for them now, But before that they will have to face the heat from Hero Honda and Bajaj, top two manufacturers in the country, not to mention their old friend TVS who are now third on that list.

[B]

Suzuki Motorcycle India Pvt. Ltd.

Suzuki Motorcycle India Pvt. Ltd. was incorporated in1997 and is based in Gurgaon, India. Suzuki Motorcycle India Pvt. Ltd. operates as the subsidiary of Suzuki Motor Corp. Suzuki Motor Corporation (SMC), a global giant of motorcycle manufacturing is headquartered in Japan. It holds major stake in its Indian subsidiary, Suzuki Motorcycle India Private Limited (SMIL). SMIL was setup after Suzuki's re-entry into the Indian two-wheeler market after it severed ties with partner TVS in 2000-01. Suzuki was then the technology provider in the erstwhile joint venture company TVS Suzuki. Suzuki Motorcycle India Pvt Ltd (SMIPL) is the latest entry into the already crowded Indian two-wheeler segment with players like Hero Honda, Bajaj Auto, Honda, and TVS. SMIPL have started their Indian operations with a 125-cc mass-market motorcycle. It has made an initial investment of Rs. 200crores to start their Indian operations.

Company sources have revealed that Suzuki would follow up this 125cc bike with a high performance 150-cc sibling sometime next year. And for the budget segment, another 100cc bike is expected in the first quarter. Mass market is the initial aim with plans to enter all the segments rapidly. They have their facilities located in Gurgaon. Suzuki had launched bike by Diwali, which is the auspicious time for buying a new vehicle in Indian families. Their setup in Gurgaon has the capabilities of manufacturing one lakh motorcycles and they are ready to step that up massively if the situation arises. They already have setup 40 dealerships around the country and are going to establish 4,000-5,000 sq.ft showroom and service stations to provide services to the customers. The parent company happens to be one of the largest manufacturers of two-wheelers in the world with more than 20 lakh bikes sold per annum. They are popular for their range of high performance road machines, lightweight super bikes, dirt bikes, street bikes, and motocross and fun bikes globally.

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