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India to be Yamaha’s 2nd largest market

Murali Gopalan | Updated on August 22, 2014 Published on August 21, 2014

Changing gears Yamaha is a marginal player by numbers in India, but ispoised to become an important centre for global sourcing. S. MURALIDHAR

Three million units will be produced locally by the end of 2018

Yamaha Motor India will have cause for cheer with its India numbers overtaking Thailand in the second quarter (April-June) of this year while rapidly closing in on Vietnam. Indonesia, however, continues to be the company’s largest market with sales of 715,000 units in the period. The results were declared a fortnight ago in Japan.

India and Vietnam are tied at 140,000 units in Q2 of this year with Thailand slumping to 53,000 units. In the same period last year, Vietnam had posted sales of 167,000 two-wheelers while Thailand and India followed with 106,000 units apiece. Indonesia continued to be comfortably ahead with 655,000 units in April-June 2013.

Taking this one step further, half yearly results of this year show India’s sales up to 260,000 units (from 203,000 units in H1 of 2013) with Vietnam marginally ahead at 291,000 units, a dramatic slump from last year’s level of 403,000 units.

Thailand is in free fall with January-June numbers down to 98,000 units from 211,000 units in the same period last year.

Quite predictably, Indonesia is the undisputed leader with sales of 1.3 million (1.27 million in 2013) units in H1 of this calendar.

Increasing demand

Clearly, demand in Vietnam and Thailand is on the wane for Yamaha’s two-wheelers while it is only a matter of time before India emerges its second largest market after Indonesia. The process is already underway with the company set to commission a new plant in Chennai towards the end of this year.

Its capacity will be increased in phases to 1.8 million units by 2018 and, along with its other facility in Surajpur, Yamaha will have nearly three million bikes and scooters rolling out from its India plants.

The Japanese automaker has also set in motion Project Indra (Innovation and New Development based on Responsible Analysis) which will eventually lead to production of the world’s most affordable motorcycle in the Rs 30,000 price range. This will be facilitated by teams from India and Japan which are pulling out all stops to train ancillary suppliers in becoming an active part of Yamaha’s global sourcing programme.

Over the next two years, the value of spares shipped out from India is expected to jump six fold from Rs 60 crore today to Rs 360 crore. The top priority is to ensure that Indian suppliers focus on consistency in quality while keeping costs in check. Once this is in place, the affordable bike will become a reality that could then be sold in India and other potential markets like Africa, Asean and Latin America.

Gradual growth

From Yamaha’s point of view, the role of India has changed dramatically since the time it first set up shop here in the mid-1980s. What began as a dream run gradually turned horribly wrong after it parted ways with its local ally, the Escorts group. Yamaha found it almost impossible to put its house in order for some years while rival manufacturers quickly consolidated their positions in the market.

Even today, Yamaha is still a marginal player by numbers against the likes of Hero, Honda and Bajaj but has figured out that it makes more sense to take one step at a time. Its global President & CEO, Hiroyuki Yanagi, has headed operations here a decade ago. This was the time Yamaha was skating on thin ice and Yanagi would be doubly keen to ensure that a stronger foundation is in place now.

As a result, India will be an important nerve centre for global sourcing thanks to the competence of its suppliers. Yanagi also believes Africa could be served well from India in the coming years where the first growth impetus will be the affordable bike. Eventually, India could overtake Indonesia because of the sheer size of this market which is already the largest for two-wheelers in the world.

Published on August 21, 2014
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