The acquisition of iconic British motorcycle brand Norton brings the Chennai-based TVS Motor Company Ltd face-to-face with Royal Enfield in the niche category of age-old classic motorcycles not only in India but also in Europe and the UK, the original home market for both the brands.
Besides access to a premium heritage brand, TVS Motor’s Norton deal brings to its table technological capabilities to make bigger engines – especially two- and four-cylinder powertrains, umbrellas like Commando and Dominator range, several new models in the pipeline and an immediate credible entry into the lucrative UK and other European markets.
Meanwhile, in India, TVS Motor would look to directly compete with Royal Enfield, which sells bikes across 350cc-650cc engine capacities and continues to command 96% share in the domestic midsize motorcycle segment, according to the FY20 data released by Society of Indian Automobile Manufacturers (Siam).
The midsize motorcycle category can be attributed to the bikes with 251cc – 800cc engines.
In India, it grew almost seven-fold from 120,964 units in FY13 to 833,082 units in FY19, before declining 18% in FY20 to 681,820 units on the economic slowdown felt across the industry.
This growth was led by a robust demand for Royal Enfield motorcycles, as the brand enjoyed a near-monopoly position, commanding the loyalty of a large pool of customers that included newly employed young professionals, riders upgrading from smaller 150cc-220cc models, among others.
The category has attracted several manufacturers including Bajaj Auto, which tied up with UK’s Triumph Motorcycles; Mahindra & Mahindra Ltd, which acquired British and Czech brands BSA and Jawa respectively, and the iconic US-based Harley-Davidson Motor Company among others.
TVS Motor already has a technical arrangement with BMW Motorrad wherein it makes 310cc bikes branded under BMW and it’s own Apache brands.
“Although, it is too early to forecast but whenever locally made Nortons make their way into the Indian market, the brand will largely pull motorcyclists who currently ride Royal Enfields,” said a senior executive at a leading two-wheeler company who did not want to be named. He was referring to the existing pool of over a million Royal Enfield riders in India.
One-and-a half-year ago, Royal Enfield had launched 650cc twin-cylinder bikes — Continental GT and Interceptor models ¬¬– as upgrade options for its existing customers.
“Royal Enfield will see a lot of competition in its category starting 2022 when Bajaj-Triumph will launch its models and Jawa and BSA would have consolidated their brands. Norton is expected to sit above all of them,” the person quoted above said.
On 17 April late evening, TVS Motor said its overseas subsidiary TVS Motor Singapore Pte Ltd signed an asset purchase agreement with Norton Motorcycles Holdings Ltd and Norton Motorcycles (UK) Ltd (both were in administration). The company said that the all-cash transaction of GBP 16 million ( ₹153 crore) was concluded by Project 303 Bidco Ltd, a newly incorporated company set up under TVS Motor’s Singapore subsidiary to acquire Norton along with all other associated brands.
After announcing the takeover, Sudarshan Venu, joint managing director, TVS Motor Company, told Mint the first priority would be to restore the operational continuity for the troubled British bikemaker as soon as possible.
“We are retaining all employees. The brand will continue to hold its distinct identity and we plan to restore Norton’s glory and build upon it,” Venu said, adding that the deal includes only asset transfers and no liabilities.
“Assets include current models and the ones in the pipeline. The business would be profitable from day one,” Venu said, but refused to disclose timeline for India manufacturing of Norton bikes. Norton’s pipeline would include 650cc Atlas range that would be produced under the new owner.
