TVS Motor Company working to leverage opportunities in less Covid-hit countries

TVS Motor’s two-wheeler exports in 2020-21 stood at 7.6 lakh units, with a growth of 12% over 2019-20.

By:July 6, 2021 8:28 AM

 

Facing concerns over international operations due to the shortage of containers and the spread of Covid-19 in some target markets, TVS Motor Company said on Monday it is working to leverage opportunities in less-affected countries by launching new products and providing financing solutions to customers. Presenting the directors’ report to the shareholders in the Annual Report 2021, Venu Srinivasan, chairman, TVS Motor Company, said due to continued high traffic container movement from China to North America and Europe after the Covid-19 outbreak, there has been shortage of containers at Indian ports. This, clubbed with increased exports from India, is creating shortage of space availability or availability at higher costs. This situation was expected to continue and result in delayed supplies to global customers, he said.

TVS Motor’s two-wheeler exports in 2020-21 stood at 7.6 lakh units, with a growth of 12% over 2019-20. The company’s total exports registered sales of 106,246 units in June 2021 as against 53,123 units in June 2020. Two-wheeler exports registered sales of 92,679 units in June 2021 as against sales of 46,259 units in June 2020. The demand in the export market continues to be robust, but scarcity in container availability is affecting export volumes, the company said while releasing the June sales numbers.

Srinivasan said some target markets and countries might witness a rapid spread of Covid-19 in a second wave. A sustained drop in commodity prices and exports could reduce foreign exchange income from some of the countries. The effect of second wave was already seen in LATAM, Bangladesh and Tanzania, which are important export destinations. He said the ban of import of two-wheelers in Sri Lanka and political turmoil in Myanmar might hit exports.

However, he said, the company remains confident that the adverse impact will be lower and bounce-back swifter. This outlook of cautious optimism is built on the company’s supply chain preparedness and a belief that administrative responses will be far more measured, targeted.

The increase in demand for consumer goods and unexpected growth in auto sector had led to supply shortfall of semiconductors. The lead time for these goods has increased from three months to 18 months. The shortfall of semiconductors is likely to continue and pose as a risk in meeting the production demand, he said.

With regard to the domestic market, the company’s board is optimistic, but is concerned about the Covid-19 scenario across the country and its effects on consumer demand. Asserting that the pandemic was causing paradigm shifts in consumer behaviour that might affect many industries including the automobile industry, he said this would lead to enhanced need for a personal mobility solution. This could emerge as an area of opportunity for two-wheelers.

TVS iQube, the electric vehicle which had been well-received, has an eight-week order-book. During the year, its footprint will be expanded to 20 more Indian cities. The portfolio also is set to expand to newer formats including a 3W version, he said. TVS Motor has a strategic partnership with BMW Motorrad to develop and manufacture sub-500cc bikes both for domestic and global markets. The company has produced 83,592 units of BMW 310cc motorcycle till April 2021.

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