The TVS-Suzuki Break-Up

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Case Details:

Case Code : BSTR028
Case Length : 11 Pages
Period : 1992-2002
Organization : TVS Suzuki
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Automobile & Automotive

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

T.V. Sundaram started the TVS Group with a small transport business in Chennai in 1911. Over the years, the group diversified into two-wheelers, automotive components, automotive spares, computer peripherals and financial services.

However, the group was particularly successful in its automotive component and two-wheeler businesses. By 2001, with around 25 companies in its fold, TVS emerged as one of India's leading two-wheeler manufacturers. Sundaram Clayton was the flagship company of the group and owned a controlling stake in TVS. Suzuki's history dates back to 1903, when Michio Suzuki founded Suzuki Loom Works in Hamamatsu in Shizuoka, Japan. For the first 30 years, the company focused on the development and production of complex machines for Japan's silk industry. In 1937, the company diversified into manufacturing cars for the Japanese market. It stopped the production of cars and concentrated on the manufacture of the looms during the Second World War.

The end of the war and the collapse of the cotton market in 1951 drove the company back to automobiles. In 1952, it manufactured its first motorized bicycle called 'Power Free.'

By 1954, the company was producing around 6,000 cars per month and in the same year its name was changed to Suzuki Motor Co. Ltd. By March 2001, Suzuki's net sales were 1,600 trillion2 and it was one of the top 5 automobile manufacturers of the world. The company had 57 production centres spread over 26 countries all over the world and its vehicles were sold through 134 distributors in 175 countries. (Refer Exhibit I). Suzuki entered India through the TVS Suzuki joint venture, originally incorporated as Indian Motorcycles Pvt. Ltd in 1982.3 The company came out with a public issue in 1984 and was named as TVS Suzuki. In the same year, the company launched its first 100-cc motorcycle, Ind Suzuki,4 which was received well by the market...

Excerpts >>

2] In March 2001, 121.48 equaled $ 1.

3] Suzuki had another joint venture Maruti Udyog Ltd. (MUL), with the government of India. The company manufactured passenger cars and was the market leader in the Indian passenger car market having over 60% of the marketshare.

4] Suzuki reportedly received a payment of $ 1 million and royalty of 3% for this model.


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