by Chanchal Pal Chauhan from https://auto.economictimes.indiatimes.com
Norton is one of the most iconic British brands, besides Triumph, Royal Enfield and BSA. Incidentally now all of the remaining famed British brands either have Indian owners or strong engineering relationships with local entities.
Another Indian company bags a storied European brand.
This time it’s TVS Motor, the third largest two wheeler maker from the world’s biggest bikes and scooter market, and getting ‘Norton’ under its belt would not just fill the technology deficit, but would also make it a serious contender in the super-bike category, something its rivals are always vying for.
Industry veterans cite it as a major catch for any aspiring Indian company aiming to hit the global circuit in style. “Norton is a major brand in the developed markets of Europe and the US and at Rs 150 crore, it’s a steal. The brand has a major pull and would fill the void for TVS Motors in technology and take it many years ahead of its rivals,” says a two wheeler specialist.
TVS Motor Company has announced the Norton acquisition on Friday. Norton is one of the most iconic British brands, besides Triumph, Royal Enfield and BSA. Incidentally now all of the remaining famed British brands either have Indian owners or strong engineering relationships with local entities.
Typical of the cash-starved British brands, Norton was started in Birmingham in 1898 by James Lansdowne Norton. It has a fantastic global appeal, a strong unique design and British heritage carried for decades. It has always been closely associated with “Motor Racing” and also makes superbikes in various categories across markets.
It is a brand which has a huge opportunity for TVS to scale up and create value. TVS Motors can now focus on these developed markets with a known brand and the hugely expanding recreation biking segment. This classic and unique British design and heritage will be the core for the company looking at building out a future in premium, luxury and classic bikes as well.
TVS has spent about 16-million British Pounds on the acquisition, funded through internal approvals and, it is an asset purchase. The cash savvy Indian companies have been on the prowl with Bajaj Auto acquiring KTM and Husqvarna marquee brands in the past.
Meanwhile, the SUV major, Mahindra&Mahindra through its two wheeler company had also acquired another iconic British motorcycle brand, BSA a few years back. Mahindra also owns 60 percent of Classic Legends Private Limited (CLPL), who had re-introduced the Yezdi brand back into India.
The two wheeler market leader Hero MotoCorp had acquired American superbike maker Erik Buell Racing or EBR, – the East Troy, Wisconsin-based firm, to harvest cutting-edge technology and design to develop future models. However, the deal turned sour and the Indian entity lost a good amount of money.
EBR, a fairly new enterprise, turned bankrupt a few years after the acquisition and the technology it was developing almost got wasted for Hero MotoCorp and failed to harvest any of its investments. Subsequently, it has developed new technology centres at Kukas in Rajasthan and Germany to fill the tech-deficit.
The cash-rich Indian companies have been looking at the global spectrum of motorbiking and Norton gets TVS to that niche level.
Virtually on a bankruptcy mode, Norton had undergone a rough patch in the past two-years, though TVS has not taken any of its past liabilities or the responsibilities. While the Chennai-based entity has committed to meet all customer commitments and will carry on with all the existing employees too. There are about 55-60 of the permanent employees serving Norton at the time of acquisition as per the company website.
Industry insiders say what is the need for TVS to acquire Norton of UK at approximately Rs 150 crore at such an unpleasant hour, amid the coronavirus scare and massive uncertainties, especially when they already have a tie up with BMW Motorrad.
An industry veteran quipped, “BMW tie-up restricts them to 500cc (in terms of engine capacity), whereas with Norton acquisition they can wheel out 650-1800cc of biking. Moreover this opens up the entire Europe and the US markets for them … Norton may not be too popular in the West, but mind you it is strong in technology and engines, which will determine the future of performance biking and motor racing…”
According to Sudarshan Venu, Joint Managing Director, TVS Motor Company, “Norton is an iconic British brand celebrated across the world, and presents us with an immense opportunity to scale globally. We will continue to retain its distinctive identity with dedicated and specific business plans.”
Due to the challenges it (Norton) faced in the last few years, TVS insiders believe in the flipside there’s potential to scale up the company to create massive value in the long-term from the new acquisition to the Indian two wheeler company.
Norton is a brand that always stood for bespoke production, craftsmanship and unparallel motoring luxury along with unique design and innovation, something TVS has been looking for and really seeks to build out. In fact, each bike costs upwards of 25,000 British Pounds and is custom-built for the customer in those markets.
As for the industry gains, TVS would be eyeing huge synergies across supply chain and distribution. These gains would be beyond the product and the company would be looking forward to the new products in the pipeline. TVS has got all the intellectual proprietary and brand rights and is looking forward to resurrecting and scaling it in the future.
TVS Motor Company, a reputed manufacturer of two-wheelers and three-wheelers in the world, has operations across a dozen international markets like Indonesia, Philippines, Yeman, Columbia, Kuwait, Yeman, Honduras etc. The new string; Britain’s iconic sporting motorcycle, Norton will carve out TVS into a storied motorcycle maker of modern times and will reflect its rising prominence in the highly competitive international two-wheeler market.