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Gearing up for new growth

Murali Gopalan | Updated on July 03, 2014

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Yamaha is all set for a new chapter



With barely four months to go for the inaugural of its new plant in Chennai, Yamaha is getting ready for a crucial phase of its India growth plan.

This is where its scooters will play a big role in the commuter segment which accounts for a lion’s share of two-wheeler sales in the country. Motorcycles still rule the roost, largely led by the Splendor and Passion, but scooters have been seeing growth of over 20 per cent with Honda’s Activa leading the way.

Two-wheel trend

At present, Yamaha’s scooters take up 45 per cent of its monthly sales of around 50,000 units but, going forward, this component will increase significantly with the commissioning of the Chennai plant. Yet, cautions Roy Kurian, VP (Sales & Marketing), there is a lot of hard work ahead especially in a competitive market like India with a host of strong global and local players.

“We believe that the second half will see monthly sales of 60,000 units which will increase gradually in 2015 once the Chennai facility is up and running,” he says. This will be in line with the company’s goal of producing a little over eight lakh units in India this calendar of which exports will account for nearly 25 per cent.

While the Chennai plant, planned with a capacity of 1.8 million units annually, will increase Yamaha’s overall capacity to nearly three million units (along with Surajpur and Faridabad) by 2018, it will still be trailing Hero, Honda, Bajaj Auto and TVS Motor. Despite this obvious reality, the company believes that India will emerge its top market, even ahead of its traditional base, Indonesia, by the end of this decade.

This is based on the fact that not only is India already the largest two-wheeler producing nation in the world but it also has a substantial ‘youth’ population which forms an important customer base. It is these buyers that Yamaha will target as part of its goal to increase volumes and emerge a force to reckon with. And the bait, at least for now, will be scooters which already have a near 25 per cent share of the market.

Main player

The recently launched Alpha is a critical part of this plan as it competes in the category where Honda’s Activa is all-powerful with monthly sales of over 1.8 lakh units. In contrast, the Alpha is doing just 12,000 units but Chennai will play a critical role in boosting overall numbers. “We need to push the Alpha since it is part of the volumes segment,” Kurian says.

Yamaha has been around for nearly two decades but failed to capitalise on the initial craze that accompanied the Japanese bike wave of the 1980s. After parting ways with its Indian ally, Escorts, it has had a challenging time putting its house in order.

It is only over the last few years that the company has evolved a strategy where volumes will come from scooters while its motorcycles will reflect the ‘Yamaha DNA’ and have a more premium positioning. The new 150cc FZ launched on Monday is part of this strategy.

An ultra-affordable motorcycle is also being planned which will, perhaps, be exported to Africa, the next stopover for the company.

Published on July 03, 2014

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