Right time for Indian consumers to move towards online buying of tyres: P Madhavan
TVS Srichakra Ltd is a leading manufacturer of two & three-wheeler tyres and off-highway tyres and is part of the TVS Group, which is the largest auto ancillary group in India, with a turnover of over $8.5 billion. The company rolls out around 2.8 million tyres every month out of its two manufacturing facilities located in Madurai (Tamil Nadu) and Rudrapur (Uttarakhand). They enjoy a significant market share amongst two-wheeler manufacturers in India and have a huge nationwide distribution and dealership network to cater to the after-market demand.
Product innovation, quality performance and constant watch on the market to cater to the local sensibilities make TVS Eurogrip what it is today. The company has invested in a significant way in the last one year on brand communication, which has helped in increasing the top of the mind recall by more than 25%. With the changing needs and the growing youth population in India, TVS Srichakra is evolving and rejuvenating itself to make it more appealing as the tyre of choice for the younger population.
In conversation with Adgully, P Madhavan, Executive Vice-President – Sales & Marketing, TVS Srichakra, speaks at length about the COVID-19 impact on the tyre industry and green shoots of recovery, rural markets spurring demand, brand communication strategy, outlook for the coming and much more.
Generally, there is a lull in the auto industry though the last quarter has shown some signs of improvement. Has it impacted the tyre industry overall and how is the two-wheeler tyre industry performing?
As we are aware, 2020 has been a year filled with uncertainty and COVID-19 has had an impact across industries in the first half of this year. However, in the last couple of months, India Inc has moved on, embracing the new normal.
Apprehension around shared modes of transport has led to increased usage of private mobility and that has had a direct impact on two-wheelers and two-wheeler tyres. The second half of the year has already seen new two-wheeler launches. We are definitely optimistic about prospects in the foreseeable future and we will continue to focus on our key growth drivers like digitalisation of our sales processes, distributor network & capacity expansion among other factors that positively influence the Indian tyre industry.
The supply chain had been disrupted due to the pandemic. How did TVS Eurogrip manage distribution during those times both with your OEMs and your dealer networks? Is India ready for online buying of tyres?
From a supply chain perspective, we managed physical distribution with hardly any interruption through the lockdown through meticulous planning. So, we had managed the supply chain very well overall.
Over the last few years, we have been consistently investing on digitalisation and consequent to the recent developments, our sales systems and processes are now on a path of accelerated technology adoption. We had launched a retailer app “TVS Eurogrip Bandhan”, which helped digitise retailer loyalty programmes and order booking processes. To address any gap in the replacement market and also enable our retail partners to place orders at their convenience without depending on salesmen visits, we introduced an e-ordering feature, “Click-to-Order” as part of our Bandhan app. Early adoption of this feature has been encouraging and many of our trade partners are enjoying the benefits of contactless ordering processes.
We believe this is the right time for Indian consumers to move towards online buying of tyres. While the numbers are not flattering yet, we do see this as a segment that is here to stay and one that will show good growth in the years to come.
Everyone is talking of technology and radial features in their product. How are you different compared to your competition and what are the compelling reasons that make the tyre buyer decide to buy a certain brand of tyre?
We have specialised and focused on two- and three-wheeler tyres for over three decades now; in fact, we are one of the only brands that specialises in two-wheeler tyres. Our long experience in two-wheeler tyre design and manufacturing backed by global R&D capabilities helps us create world class tyres suited to the preferences of young millennial bike riders. Our tyres are designed globally, manufactured in India and tested and certified globally, making us a truly competitive global player. With respect to tyre R&D, we have 17 tyre innovations which are under patenting to our credit as of now. Our Zero-degree steel belted radials come with W rating that deliver the same degree of control and stability for speeds up to 270 km/hr. Our range of technologically advanced bias tyres also stands apart with respect to grip and durability through special technologies like tri-polymer technology. Some of the other technologies that give us a competitive advantage include Air Seal and Dry Bond Technology.
We are working on effective ways of communicating all these strong differentiators to our end customers in a way that resonates with them which will empower them with the knowledge to buy our brand.
Tyre is a low involvement category. Most buyers trust their mechanics and the dealers who are still very influential. Is this trend changing, are buyers more aware of what kind of tyres they should buy? How are you educating and creating awareness with these buyers?
While mechanics and dealers continue to be an important influence in the tyre purchase process, we are certainly seeing a shift in the riders’ purchase behaviour and decision journey when it comes to choosing tyres for their two-wheelers. The two-wheeler segment itself is seeing a shift in preferences and the young rider today is more aware of what he/she requires. To add to that, the pandemic and post-pandemic eras have seen an enhanced emergence and understanding of the digital medium and a lot of product and brand discovery is now happening online. In line with customer expectations, TVS Eurogrip is looking to engage with the target audience through the digital medium and digital marketing is the key thrust area for this year (and going forward) to help consumers with the information and knowledge they seek.
This year, the rural and small markets have shown good demand potential. How has TVS Eurogrip performed in the smaller markets and what strategies have you deployed to be highly visible and penetrate those markets?
It is heartening to see rural demand picking up faster than the urban demand and this signifies tremendous scope for TVS Eurogrip. As a brand, we already have a strong presence in Tier 2 and Tier 3 markets. Enhancement of our distribution and dealer networks is one of our key growth drivers; this greatly helps in terms of availability and ease of accessibility for our end customers in these markets. In the last 2 quarters, we have started servicing 120 new markets through direct distribution model and these are largely in the smaller markets. Quick adoption of technologies and digitalisation efforts such as the e-ordering facility we introduced at the beginning of the lockdown have helped penetrate new markets. We have made concerted efforts to activate and engage with the retail network in these markets effectively.
How is the outlook of the tyre industry for the coming year? How is your brand going to navigate the next one year as the road ahead is still bumpy? Where are your revenues coming from? Is it from the replacement market or from the OEM business?
The outlook is definitely positive and there are clear pointers towards robust growth in the coming couple of quarters. Beyond that, given how this year has been uncertain in many ways, we will have to see how things span out in the next fiscal.
Increased usage of personal transport will definitely create a demand for the tyres in the replacement market and we see this growing in the near future too. On the OEM side, the drivers such as rural economy, need for personal transport in view of the pandemic indicate a favourable scenario for the growth of the two-wheeler industry. So, both sides will continue to contribute to revenues and growth.
For years, the brand communication for tyres has been in the space of mileage and safety. Has this evolved and is there any change that brands are trying to attempt? What has been the core positioning of TVS Srichakra and how are you communicating and engaging with your audience?
Certainly, most of the tyre brands have been focusing on safety and durability along with certain functional attributes such as grip over the years and this will continue as we go forward too as these are integral to the category. Product differentiation in the category is not very high. However, the communication pegs and codes in the category are slowly changing to reflect the new age rider’s preferences and the focus is now also on the emotional aspects behind buying a two-wheeler and a two-wheeler tyre. Our core positioning for TVS Eurogrip is that we understand bikes and bike tyres the best given our experience in the category and our global expertise (our tagline, “The Bike Tyre Specialist”, stems from there). Our endeavour is to communicate to our potential customers about how we work towards enhancing the overall riding experience while we continue to focus on innovation, superior quality standards and high performance as our key brand values. On the digital medium, we look for engaging content ideas and contests like #TheLockdownSpecialist and #TheSpecialistLeague that resonate with our target audience.