Yamaha confident Indian market will ‘liven up’ after the BS VI changeover

Yamaha Motor is confident that growth will be back in the Indian two-wheeler segment once the transition to Bharat Stage VI (BS VI) emission norms happens from April 2020.

“We anticipate that the market will liven up after the BS VI changeover, so (we) are not concerned about the situation,” the company has indicated to analysts at a recent Q&A session in Japan. This was done soon after the first half results were declared some weeks ago.

The top management is clearly aware that things are not in the best of shape right now in India. “We have heard that total demand has decreased in India due to the tightening of monetary policy and increase in compulsory automobile liability insurance premiums, but the various manufacturers have also been reducing inventory to change over to models compliant with the new emission standards (BSVI),” it has stated.

According to Yamaha, unit sales of models such as the Fascino and RAY-ZR grew for a period, but are “currently basically flat”. The company has told analysts that competitors in India are “rapidly changing over” from 110 cc to 125 cc models.

“During the emission standards changeover in Europe, etc, there was a grace period for sales of previous models, but in India, sales of non-compliant models will be completely prohibited after the new regulations take effect from April 2020,” Yamaha has noted.

Yet, it is not deterred by this reality and has articulated its plan to “leverage the changeover timing to launch competitive 125 cc products”. India will be a key part of the mid-term management plan for Yamaha where the new emissions era could hopefully prowess its strengths in fuel injection technology.

Expectations

“Our expectations for next year are improvements in the developed markets motorcycle business and counter-attack in India through launch of BS VI-compliant models,” the company has said in the Q&A session. The fact that traditionally favourite markets in the ASEAN region are not doing so well either only means that Yamaha will pull out all its stops to get things moving in India. “We have no concerns about total demand in the Philippines and Brazil, but will monitor total demand in Indonesia and Vietnam carefully. Demand in Indonesia has been gradually declining in the first and second quarters,” the company has stated.

As for the developed markets, Yamaha has pointed out that its current European motorcycle models will be discontinued by the end of 2020 and it will be “turning over our model range from this second half-year into next year”. Additionally, the company is gradually “reducing our inventory in order to achieve compliance with the Euro 5 emissions standards” and is on track to clear out its inventory of previous models this first half-year.

“There was very little production last year, and the difference with increased production from this second half-year will have a significant impact on income improvements. At the very least, we believe that we will be able to maintain competitiveness through product launches by next year,” Yamaha has reiterated.

Yet, it is India that the Japanese two-wheeler maker will be focussing on in a big way for the sheer potential it offers. The market may not be in great shape right now but still annual production of 21 million bikes and scooters is not a trifling number and Yamaha just cannot afford to let go of this growth opportunity.

The company will be hoping that the BS VI era will mark a new chapter in displaying its technological competencies but will also have to reckon with the reality that it is still not in the top league. After all, the likes of Hero, Honda, TVS and Bajaj have pretty much cornered a large chunk of the two-wheeler pie while Suzuki and Royal Enfield are also stepping on the gas aggressively. Brand Yamaha still has great recall factor and this also explains why the present top management in India has decided to focus solely on the premium segment in bikes and scooters. There is really no way it can hope to compete in the commuter space where there are a host of established players already. Further, the leadership team has also realised that it makes more sense to play to the brand’s strengths rather than being all over the place.

The right branding

The efforts are paying off, albeit slowly, with a host of branding initiatives coupled with the right products that showcase what Yamaha is all about. After all, it was one of the biggest draws way back in the 1980s when the Japanese entered the motorcycle arena in India. Honda and Suzuki were as popular but Yamaha still stood out because it had a unique DNA that attracted buyers to showrooms.

“Every time we come out with a product, we should provide the Yamaha uniqueness to customers and that differentiation is very important,” Motofumi Shitara, Chairman, Yamaha Motor India group, had told this writer in a recent interview. According to him, Indian customers are very well informed and “understand the uniqueness” of products such as the MT-15 that was launched at that point in time. Shitara said motorcycling was now a lifestyle in India and customers were looking for models to suit their requirements.

“Motorcycle customers need a different sense of lifestyle from the routine work they do. During weekends and holidays, they need something new and unique,” he said.

Till not-so-long ago, there was a different kind of communication for Yamaha models. This obviously did not create the desired impact considering that it was only the RX 100, launched over three decades earlier, which continued to enjoy top recall.

“The image of Yamaha in India was still about RX 100 and customers did not have much of an idea of other contemporary models,” he says. This perception clearly had to change and Shitara decided to go in for a complete brand overhaul or, as he puts it, “integrate totally, each model one by one under one umbrella”.

Fresh campaigns

This led to the‘The Call of the Blue’ brand campaign where Yamaha quickly set about associating itself with this colour that is also part of MotoGP. This message was extended to its employees as well as within the corporate office and factories where blue literally became the calling card across the ecosystem.

The idea was to promote a uniform image about the brand and keep all employees on the same page while delivering the message about the company and its products to the world outside. As Shitara pointed out, promotion is just not the responsibility of the sales workforce but of all employees. “Everyone must provide the same answer related to Yamaha and carry the same attitude,” he said.

This was not the case till recently when there were divergent views coming in from people at the factory, sales or the corporate office. “Everyone was having different views but since I took over, I have ensured that there is just one identical view related to our company,” he added. Rebuilding a home is not the easiest of tasks but, on the face of it, there is a quiet determination by Shitara and his leadership team to put things back on track.

At one level, it is puzzling why a top brand like Yamaha frittered away a chance to consolidate itself especially after the heady days of the 1980s and ‘90s but all that is water under the bridge now.

The company now sees a much larger role for India from the viewpoint of its overall mobility vision. It has entered into an alliance with Hero Cycles for electric bicycles and will be hoping that there is some sort of positive brand rub-off on its motorcycles and scooter business.

It could also be looking at other options like the three-wheeled Tricity motor scooter, which has been launched in some markets. For now, this seems unlikely in India but there is no telling what could happen in the near term with the next generation of riders constantly seeking something different in a growing era of urbanisation.

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