Yamaha Motor to focus on thorough breds for India ride

Yamaha Motor believes it is more prudent to “focus less on pricing strategy and more on launching thoroughly developed products” in the Indian market. The company made these observations at an analysts Q&A briefing in Japan recently in connection with its third quarter results for 2017.

Yamaha has also spoken of the growth in the Indian two-wheeler market, which will touch 18.5 million units by the end of this calendar. It refers to the Bharat Stage IV emission norms implemented nationwide from April 1 followed by the Goods and Services Tax. “Amidst these business conditions, it appears that our competitors have been offering significant rebates to stimulate the market,” it adds.

The company is categorical that it is working towards increasing its production scale that is now doable with the commissioning of the Chennai plant. “We will work to reduce costs while meeting customer expectations,” Yamaha has stated in the analysts briefing.

Replying to any concerns in Q4 (October-December), the company says that based on “careful consideration of the income forecast” for the motorcycle business in emerging and developed markets, “we face a situation where sales of low-priced models in Indonesia, Vietnam and India will not progress much without incurring a certain degree of costs”.

It is in this context that Yamaha will take into account the risk of inventory adjustment. It also believes that sales of low-priced models in Indonesia will reduce in Q4. “We could conceivably maintain sales through discounting but we will instead respond through adjusting production,” adds the company.

It remains to be seen how the numbers will eventually stack up for Yamaha globally by the end of this calendar though from an Indian viewpoint, the challenges remain. While numbers have increased over the years, there could be some degree of concern on the pace of change.

The transition to BS IV was a challenge for all automakers though the top priority at this point is to get sales back on track. There are still mixed views within the industry on the aftermath of demonetisation and the impact of GST even while everyone agrees that growth will pick up from 2018.

In Yamaha’s case, it will also be up against a resurgent Suzuki, which suddenly seems keen on putting the past behind while working aggressively towards the future. Thus far, the company was seen as being quite inactive but it now looks as if it wants to get on to the fast track.

Like Yamaha, Suzuki will now focus on premium motorcycles and commuter scooters since this is the only way of differentiating its competencies in this intensely competitive two-wheeler market. For the moment, Yamaha is ahead and will need to pull out all stops to ensure that it does not let go of the gas pedal.

The company has also been betting big on Africa as a new growth region where the Chennai plant will play a big role. This is where the basic commuter motorcycle, the 110cc Saluto, was positioned as part of the script. However, countries such as Nigeria have been through tremendous economic volatility in recent times and are only now limping back to normalcy.

In all likelihood, Yamaha will perhaps take a break from low priced products and work on its strength of premium motorcycles even while pushing for sales of successful scooters such as the Fascino. Eventually, the goal is to ensure good margins and profitability that are not the easiest of tasks in a market like India.

In the meantime, there are bigger challenges ahead like BS VI in 2020, which will call for considerable investments in fuel injection technology. It only drives home the point that it makes more sense to look at top-end products that carry the Yamaha DNA. Low-priced options will hardly help the company’s cause both from the viewpoint of its brand as well as bottomline.

COMMENT NOW