Triumph India has sold motorcycles through multiple routes. Tell us about the tilt towards CKD.
When we started our operations in India, we began with CKD and CBU in 40:60 ratios. Then we began to use the Free Trade Agreement (FTA) through Thailand route. The objective was to bring the motorcycles here as soon as they were launched globally. The strategic advantage is that you don’t get delayed. When you go through the FTA route or the CBU route, the cost goes up and we were also not fully utilising our investment in India. Another issue is flexibility. Through FTA or CBU, it takes a minimum of three to six months of planning to make a product available. So, when there are changes in demand, models or colours, you just can’t match it and we can rotate it two to three times a year.
We saw a benefit of making in India, even though we only assemble and not manufacture. It gives the customer confidence that we are not here to make money overnight and leave. Local assembly gives you cost benefit in terms of taxes, which marginally reduce and give you flexibility to change the model mix to meet demand. It also allows you to have good spare part availability in the country. Overall, it helps in pricing, availability and in giving both customer and dealers confidence that Triumph is here for the long run.
It’s been a dramatic year for businesses in India...
The economic state of the country was hit three times. Ideally, things like this should not hit in one financial year – I’m talking in terms of Triumph because we follow a June-July year. So, we have taken more hits than other manufacturers who start their year in April. Demonetisation was a road bump for us for a short while – about two weeks. Surprisingly, after demonetisation, we had a growth of almost 20 percent. Customers with money could bank it, therefore, make it legal and then buy the products. Earlier, some customers would buy products in other names but they would not have documents to get the money, so we stopped that growth. Partly, it impacted our business, but later on, it gave us the kickback. In the short term, yes, it was a business loss. But in the long term, it was very good.
BS III came as another hit. We got only one and a half days and I am very proud and happy to say we are the only brand in India which abided by the Supreme Court order. We bought all 93 BS-III bikes from dealers and exported them. We did not give a single rupee discount on BS-III bikes. The remaining motorcycles, which had to be updated to Euro 4, we have done all that and begun re-supply. This has left our brand strong because we believe giving discounts cheats the customers who have recently bought bikes at full price. Resale value goes down dramatically as well.
Next, GST will have an impact of three percent cess on motorcycles above 350cc which I think will affect prices. We are yet to decide how much we will absorb but I believe the impact will be a little expensive. But, I believe, customers in this category will be okay to pay a bit more for our newer products with better features, style and performance. But, yes, initially, there will be a drop.
How has Triumph coped and what is the plan ahead?
I would say, on the retail front, we are more or less flat. We haven’t grown or dropped, which ideally should have happened. Next year is very promising. We think we should grow by 15-20 percent and will continue to be the fastest growing premium motorcycle brand in India. Our strategy is clear on four fronts. In terms of brands and products, we will get the newest, freshest and the best of products and will not bring old or outdated products to India. We are also expanding our network which is currently 14 dealerships. It will grow to 16 soon and we plan to expand it to 25 by 2020 with nine new dealerships in Tier 2 and 3 cities.
The third part of the strategy is to make our bikes more affordable, which will be in two ways. First, we have tied up with HDFC Bank to offer seven-year financing, something that was previously done only for cars. We are the first to bring it to motorcycles because we know the quality and reliability of our products is fantastic. Secondly, we are tying up with a start-up which will fund second-hand two-wheelers. This is another initiative by us.
The last part of our strategy would be our training schools which we will expand further. We do the California Superbike School; we will do the Buddh Circuit on-track training and we will continue doing the Tiger Training Academy. Through these training schools, we are promoting safe and responsible riding. I’m sure these strategies will help us grow further, faster.
There must be a lot of exciting fresh stock coming in to replace the BS-III void. What’s next?
I think Triumph would be one of the brands you should watch for exciting news. We refreshed the full, smaller adventure range a year ago and we also refreshed the full, classic range. Now we will refresh the roadsters plus the supersports. You will see a lot of excitement this year.
The new Tiger Explorer has been due for a while.
Yes, we will have the Explorer in India very soon.
Shortly followed by the new Speed Triple...?
(Laughs.) I don’t want to comment just yet. But to be honest, this year is going to be very exciting for the urban segment and we will create benchmarks.
Will some of these be new, unreleased products no one has seen yet?
I would say, yes!