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Mitsubishi’s game-changing venture into India with TVS Mobility

Mitsubishi has acquired a 32% stake in TVS Mobility with an initial investment of ₹300 crore. Find out more about this strategic move!

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With the announcement of its decision to acquire a substantial stake in TVS Mobility Private Limited, the illustrious Japanese multinational automotive manufacturer Mitsubishi has shaken up the Indian car sales market.

Mitsubishi is launching its bold entry into the rapidly growing Indian automotive market through this strategic alliance, which should usher in a new era of innovation and fierce competition.

Not only is this a smart business move, but it also shows that Mitsubishi is committed to its goal of becoming a global powerhouse. Mitsubishi is well-positioned to take advantage of the enormous potential in the Indian market thanks to its partnership with TVS Mobility Private Limited, a major participant in the country’s automotive industry.

Also read: Sony-Zee merger terminated

The strategic partnership

Strategically combining Mitsubishi’s worldwide knowledge with TVS Mobility’s local market expertise, the two companies have formed a partnership known as TVS Mobility Private Limited. This partnership signifies Mitsubishi’s return to the Indian car sales market, a major step in the company’s strategy for global expansion. 

Mitsubishi has put a lot of money into this partnership. The initial investment of ₹300 crore will allow the Japanese automotive giant to acquire a 32% stake in TVS Mobility. Mitsubishi has shown its dedication to the joint venture and faith in the Indian auto sales market with this investment.

TVS Mobility, a major participant in the Indian aftermarket and distribution of automobiles, is an integral part of this collaboration. Mitsubishi can benefit from TVS Mobility’s extensive knowledge of the Indian market and distribution network, which will help it build a strong presence in the country.

The two organisations have joined forces to create an all-encompassing ecosystem for vehicle mobility in India. Sales of new vehicles, VAS (Vehicle-as-a-Service) business models, and operational solutions will all be part of this ecosystem. 

Together, Mitsubishi and TVS Mobility are reimagining the ownership experience for passenger cars, commercial vehicles, and MHE  (Material Handling Equipment) by providing a comprehensive suite of services.

There are substantial monetary ramifications to this collaboration. The revenue goal of $2 billion over the next three to five years is outlined in the business model. The current revenue for TVS Mobility is approximately ₹5000 crore, and the company aims to increase it to ₹15,000 crore within the next three years.

The automotive industry in India is about to undergo a sea change thanks to this groundbreaking strategic alliance between TVS Mobility and Mitsubishi. In addition to marking Mitsubishi’s comeback to the Indian market, it ushers in an age of unprecedented innovation and fierce competition.

Mitsubishi’s strategic expansion

As part of its larger plan for global expansion, Mitsubishi acquired a stake in TVS Mobility. With its enormous untapped potential, the Indian vehicle sales market is a prime target for the automotive behemoth’s expansion plans.

Strategic alliances are nothing new for Mitsubishi. The Mitsubishi Hitachi joint venture is just one example of the company’s history of fruitful collaborations. Through these endeavours, Mitsubishi has been able to solidify its position in numerous markets by utilising its technological expertise and global market strategies.

Also, the motivation behind Mitsubishi’s investment in TVS Mobility goes beyond the sale of automobiles. Innovative services, like the ability to buy insurance and schedule maintenance appointments through a mobile app, are in the works for the company’s upcoming launch. 

As a whole, this fits in with Mitsubishi’s plan to build a vehicle mobility ecosystem that extends beyond the sale of individual vehicles.

Impact on the Indian car sales market

A major shift is on the horizon for the Indian auto market as a result of Mitsubishi’s strategic alliance with TVS Mobility. With its diverse and promising market, Mitsubishi faces both opportunities and challenges in India’s automotive industry.

The alliance can raise the level of competition in the Indian vehicle sales market. Together, TVS Mobility’s knowledge of the local market and Mitsubishi’s global reputation for excellence and innovation can result in significant synergies. It might cause a stir in the industry, pushing other players to raise their game. 

The Indian market, though, isn’t without its difficulties. An in-depth familiarity with the local context is necessary due to the price-sensitive nature of the market and the diverse customer base with different preferences. The capacity of Mitsubishi to meet these varied demands while preserving its world-renowned quality and innovation is crucial to the company’s success.

Beyond merely selling cars, the partnership’s ultimate goal is to establish an all-encompassing vehicle mobility ecosystem in India. This can revolutionise consumer expectations and establish fresh benchmarks in the industry.

Financial metrics

The most current data indicates that Mitsubishi’s share price is ¥3,129 (as of February 20, 2024). A market cap of ¥12.73 trillion has been assigned to the company’s shares. Analysts anticipate that Mitsubishi’s financial performance and, by extension, its share price, will be positively affected by the partnership with TVS Mobility.

In the fiscal year 2023, around 21.2 million automobiles were sold in India, making India’s automobile sector, one of the significant players in the market. In the years between 2017 and 2019, the market expanded at a CAGR of more than 10%. 

Also read: Financing your next car purchase? India’s auto finance sector and lenders

Implications for investors

Investors might find this partnership to be an intriguing opportunity. A major player like Mitsubishi venturing into the Indian auto sales market is a sign of the market’s promise, which could lead to additional investment from outside the country.

Competition and innovation are likely to rise as a result of this partnership, which could be good for investors. There are investment opportunities in related sectors like vehicle financing, insurance, and after-sales services due to the focus on creating a comprehensive vehicle mobility ecosystem.

Investors, though, should not lose sight of the challenges. If Mitsubishi can’t figure out the ins and outs of the Indian market, the partnership won’t work. So, investors need to keep an eye on how the partnership is doing and what plans it has.

Bottomline

A new era in the Indian auto sales market has begun with the strategic alliance between TVS Mobility and Mitsubishi. This partnership has the potential to revolutionise customer expectations and establish new benchmarks in the industry, thanks to Mitsubishi’s extensive global expertise and TVS Mobility’s deep understanding of the local market. 

Investors should keep a close eye on this development. It will be interesting to watch how this collaboration affects the future of the Indian car industry as the plot develops.

Further reading: What happened in the Indian stock market today?

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StockGro Team

StockGro is India’s first and largest ‘Social Investment’ platform aimed at helping you master the art of “Trading & Investment”. Trade, Invest and get rewarded to Learn everything about ‘Investments’ the fun-filled way.

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