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India on Yamaha’s midterm radar

MURALI GOPALAN | Updated on January 20, 2018

Going strong India could be Yamaha's top two-wheeler market by the end of the decade

Indonesia remains it's top market, at least till 2018

Yamaha Motor is targeting production of 1.2 million two-wheelers in India by 2018, according to its medium-term plan unveiled in Japan some weeks ago.

Spread across a three-year timeframe beginning 2016, the plan projects that 19 million two-wheelers will be produced in India by 2018. Yamaha’s numbers translate into a market share of 6.3 per cent which would be a considerable jump from the present level of 3.71 per cent.

According to the company’s website, it sold 6.2 lakh units in 2015 of India’s total sales of 16.7 million bikes and scooters. Yamaha’s growth projections show that barely two million units will be added in the country over the next 2-3 years. Honda, likewise, had indicated recently that India would produce 20 million two-wheelers by 2020.

Growing phase

One of the key reasons for this relatively sombre outlook could be attributed to BS IV emission norms coming into place by April 2017. In addition, two-wheeler companies need to get new technology like antilock braking systems in place by then which means that costs could go up as a result. It remains to be seen how customers will react to pricier bikes and scooters which perhaps explains why companies are being cautious about their projections.

From Yamaha’s point of view, the good news is that its second plant in India (Chennai) is already operational and its capacity will be expanded in phases to 1.8 million units. It already has a facility in Surajpur which can produce one million units annually which means that total capacity could be closer to three million units by the end of this decade.

If the script goes according to plan, Yamaha’s India operations will perhaps be its biggest worldwide overtaking Indonesia in the process. The projections in the medium-term plan show a marked difference between the two at least till 2018 with Indonesia’s output twice as much as India’s at 2.4 million units and a sizable market share of nearly 33 per cent.

Gloom ahead?

Yet, the grim reality is that the ASEAN two-wheeler market is gradually slowing down and numbers are falling in traditionally strong markets like Vietnam, Malaysia, Thailand and the Philippines. Indonesia is still the top favourite for the likes of Honda and Yamaha but it is clear that India will surge ahead in the coming years.

This also puts in perspective why Yamaha is carving out a bigger role for India in terms of making it a critical source for supply of components. In addition, it will soon be entrusted with the responsibility of servicing the African region which Yamaha has identified as the next engine of growth.

It is in this context that the company has targeted production of the world’s most affordable motorcycle which will roll out of the Chennai plant shortly. The medium-term plan also drives home the vision of Yamaha going beyond motorcycles to becoming a full-fledged provider of mobility solutions. Like other automakers, the company is only too aware of the rapid changes happening across the world in terms of urbanisation and tighter emission norms.

Yamaha has already launched the Tricity three-wheeled scooter in parts of Europe and ASEAN as part of this initiative and it will be interesting to see if it makes its way to India too.

Likewise, there could be four-wheeled mobility solutions for cities which are at the drawing board stage and may well become a reality soon.

Published on April 21, 2016

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