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Possible alliance between TVS and BMW

TVS Motor Co. is in talks with BMW AG’s motorcycle division for a possible technological alliance,as pet the Wall Street Journal today. This move could  help TVS, the Indian company in developing higher powered two-wheelers to compete with local competitors Hero MotoCorp Ltd. and Bajaj Auto Ltd. as well as Japan’s Yamaha Motor Co. and Honda Motor Co.

Even though two-thirds of motorcycle sales in India are in the entry-level segment — with engines in the 100-125 cubic centimeter range –the market for bigger motorcycles is expanding rapidly. Local sales of motorcycles with engines above 125cc rose 17% in the past financial year to 2.99 million units. The growth outpaced a 12% rise in total local sales to 10.1 million motorcycles.

Shares of TVS rose on the news and at 0647 GMT they were up 6.4% at 38.95 rupees on the Bombay Stock Exchange, where the benchmark index was down 0.8%.

Earlier Monday, the Mint newspaper, citing Mr. Srinivasan, said TVS isn’t considering selling any stake to BMW. If talks with BMW conclude favorably, TVS will join Hero MotoCorp and Bajaj Auto in tying up with global two-wheeler makers to source technology for making larger motorcycles.

Hero MotoCorp had recently signed an agreement with U.S.-based Erik Buell Racing LLC for sourcing engines, while Bajaj Auto uses the technology and sells some products of Austrian bike maker KTM Power Sports AG, in which the Indian company has a 47% stake.

BMW’s motorcycle division, BMW Motorrad, sells models under its R and K series and the S 1000 RR superbike in India.


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