April 8 (Bloomberg) -- BMW Motorrad, the motorcycle arm of the world’s biggest luxury carmaker, agreed to partner with India’s TVS Motor Co. to develop a series of bikes with engine sizes below 500 cubic centimeters.
In the deal with the Bayerische Motoren Werke AG unit, both companies will sell the motorcycles through their own channels, TVS said in a statement to India’s National Stock Exchange today.
“In view of changing motorcycle markets, demographic developments and increasing environmental demands we are expanding our product range so as to tap into fresh growth potential,” Stephan Schaller, head of BMW Motorrad, said in the statement. “This means that in future we will be able to offer vehicles in smaller capacity classes in addition to the BMW Motorrad core segments.”
TVS, whose biggest motorcycle is the 180cc Apache, will gain access to bigger-engine technology to help stem market share losses to Honda Motor Co.’s local unit and Yamaha Motor Co. in India. The country’s fourth-largest bike maker lost the third rank to Honda Motorcycle and Scooter India Ltd. in the year ended March 31, 2012, according to data from the Society of Indian Automobile Manufacturers.
TVS will invest 20 million euros ($26 million) in the partnership, Chairman Venu Srinivasan said at a news conference in Chennai, India today, and the first product will be ready in 2015. The project will entail two TVS models, Srinivasan said.
BMW motorcycles will be able to tap a vehicle segment it hasn’t been present in in its 90 year history, Manfred Grunert, a spokesman for the company, said by phone from Munich today. BMW is mainly targeting younger customers in the emerging markets of Asia and South America, he said.
The vehicles will be developed principally at the headquarters in Munich and also in India. Production is planned at TVS in India with the models of the two partners differing decisively, he said.
BMW agreed to sell the loss-making Husqvarna off-road brand in January and renewed its focus on developing the BMW motorcycles brand. The company predicts BMW motorcycles will increase 2013 sales on new models after deliveries rose 2 percent to 106,358 vehicles in 2012.
TVS Motor shares rose 10 percent to 39.75 rupees at the close in Mumbai, climbing for a fourth day. The stock has lost 5 percent this year, valuing the Chennai-based manufacturer at 18.9 billion rupees ($346 million).
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