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The Japanese juggernaut rolls on beyond Maruti too

Murali Gopalan | Updated on March 10, 2018 Published on September 28, 2017

Prime Minister Narendra Modi and the Prime Minister of Japan, Shinzo Abe, along with Suzuki chairman Osamu Suzuki (extreme right) at the Suzuki exhibition booth during India-Japan Annual Summit in Gujarat

The 1980s saw new dynamics emerging in two-wheeler and LCV segments

At one level, it only seemed appropriate that Osamu Suzuki was present when Japanese Prime Minister Shinzo Abe came visiting last fortnight.

The Chairman of Suzuki Motor Corporation has been the architect of the Maruti story in India, which unfolded in the early 1980s and has grown from strength to strength since then.

During Abe’s visit, O Suzuki announced fresh investments for his company’s Gujarat plant even while the Japan-India bonhomie was in full display with Prime Minister Narendra Modi playing the perfect host.

Even while Maruti is often cited as the Indo-Japanese success story of the 1980s, this period actually saw a host of big auto brands from Japan enter the local arena. While some made their way into the light commercial vehicle segment, the more glamorous brands tied up with allies in the two-wheeler space.

It took a Tata Motors to knock the stuffing out of the Japanese with its 407 cargo carrier. And these were no lightweight rivals with the likes of Nissan, Mazda, Mitsubishi and Toyota unable to cope with the Tata offering. Each of these companies had an Indian partner be it DCM for Toyota, Allwyn (Nissan), Eicher (Mitsubishi) and Swaraj (Mazda).

Eventually, it was a classic David versus Goliath script where the ingredient that made all the difference was localisation. The 407 had it in plenty while the Japanese quarter fell hugely short on this score. In a price-sensitive business such as cargo carriers, affordable spare parts are crucial for viability.

Fast forward to the present and it is interesting to see how some of these Japanese brands are faring. After the LCV debacle, neither Mitsubishi nor Mazda is around in India today. Toyota returned strongly with the Qualis MPV in the late-1990s, which has now given way to the more fashionable Innova Crysta.

Nissan returned through a joint manufacturing alliance with global ally, Renault, where the focus is now on brand Datsun while contemplating premium offerings for the future. It made a comeback of sorts in LCVs with Ashok Leyland and even while this did not last the course, Nissan will still extend tech-related support.

The game changer

While the LCV saga was a mixed story for the Japanese, the results were spectacularly different in the two-wheeler space where the might of brands like Honda in particular completely changed segment dynamics. When the Munjal group tied up with Honda, Bajaj Auto was the reigning monarch with its geared scooter.

Yet, it was Hero-Honda, which eventually triumphed, paving the way for motorcycles to take over. Likewise, Honda ushered in the automatic scooter revolution through its alliance with the Pune-based Kinetic group.

The only other ‘gearless’ option till then was the moped but a far more powerful scooter attracted a host of new customers. In an era of macho bikes, the Kinetic Honda offering was perceived as a sissy alternative but this was no deterrent to its mass popularity.

And even while the partners eventually split, it did not take long for Honda to replicate the scooter success story with its own Activa, which continues to lead the sales charts. Beyond this, it has also prompted a host of others to throw their hats into the scooter ring with more and more commuters preferring this mode of transport.

Honda’s other big ticket success story was the joint venture with the Hero group, which lasted a good 25 years before the two decided to go their own ways. The fact that the standalone Hero MotoCorp is still able to hold its own is not only a tribute to its never-say-die spirit but also to the enduring draw of the Splendor motorcycle from the Hero Honda days.

Honda, meanwhile, is determined to overtake its former ally in the leadership stakes and the gap has been narrowing down in recent months. While the Activa has been a monstrous hit in the market, the company is looking for a similar big bang impact with a motorcycle. Once this happens, it could tilt the scales in favour of Honda and catapult it to the top slot.

Other players

Suzuki created a dream script with Maruti in cars but just could not replicate this in two-wheelers. The alliance with TVS began with a bang, though, in the ‘80s with the new wave of commuter motorcycles that caught the fancy of the market. However, as Hero Honda strengthened its grip and a host of partnership-related issues surfaced, TVS Suzuki began losing momentum.

The split occurred in 2001 with a far more confident TVS Motor ready to stand on its own. Over the years, Suzuki has struggled to break into an intensely competitive market though it has had successes like the 150 cc Gixxer motorcycle.

TVS, on the other hand, got off to a strong start after the split with its Victor commuter bike before going through its share of headwinds.

Its Scooty and mopeds were still big draws till the next big success story happened with the Jupiter scooter. TVS has also been doing well with the Apache sports bike.

Yamaha quickly carved a niche for itself in the ‘80s with the RX100 and had everything going for itself. However, just one successful product was not enough to sustain customer interest. In addition, the partnership with Escorts was not working to plan either and Yamaha just lost out.

Kawasaki was the only Japanese brand, which did not get into an equity alliance and yet the partnership with Bajaj Auto has lasted to this day. Sure, it recently decided to go on its own in India in terms of retail as well as a new plant in Chakan near Pune. Yet, it continues its marketing business plan with Bajaj overseas, especially in the ASEAN region.

How do things look today for these Japanese two-wheeler brands? Yamaha is focusing a lot more on scooters while keeping in line with customer tastes though it is up against strong competition both from Honda and the likes of Hero, TVS and Bajaj. It has identified India as one of its most strategic markets globally and believes it could emerge number one in 2020, ahead of Indonesia.

Honda has been expanding aggressively since it parted ways with Hero and added another three facilities since then. In terms of numbers, this is a near four-fold jump from 1.6 million units to a little over six million. Interestingly, Honda and Yamaha have decided to collaborate on a niche scooter business in Japan and it will be interesting to see if this extends to India.

Maruti has been the sustained success story through the decades, which gives it a pride of place. Suzuki would ideally like this to be replicated in its two-wheeler India story too but that would be asking for the moon.

Published on September 28, 2017
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