Yamaha on slow-and-steady course in two-wheelers

It was in 2012,Yamaha began selling scooters in India. And this was coming from a company whose DNA was in power, racing and motorcycles.

“From a macho powerful image, could we pull off something different? I am delighted that customers have now begun appreciating our scooters even if we are just four years old,” says Roy Kurian, Vice- President, Sales & Marketing. From starting off as a motorcycle brand that also sells scooters in 2012, customers now perceive Yamaha as a quality scooter brand that also makes motorcycles.

“They see us as a reliable scooter manufacturer and we need to be aggressive here. Of course, motorcycles are our DNA and we cannot move away from this space. The challenge for us is to balance both,” adds Kurian. By the end of the day, there is a lot of traction for premium bike brands such as the R15 and FZ where “to satisfy the needs of cool guys”.

Yet, the requirements of the family segment needs to be met too with scooters and this is where the balancing act becomes imperative. At present, Yamaha has a 10 per cent share in premium bikes and eight per cent in scooters. In contrast, its share in commuter bikes, where the Saluto is the latest entrant, is a lot lower in a segment where Hero rules the roost.

It is this reality that has prompted the company to go in for a top-down approach in bikes, where it can gradually make inroads into Tier 2/3 regions. This is where offerings like the recently launched Saluto can hopefully make a stronger connect.

According to Kurian, the commuter scooter customer seems more aware and experimental than his motorcycle counterpart in the same space. Perhaps this also has to do with the fact that scooters draw diverse buyers, both from the viewpoint of gender and age. Catering to the needs of this group means offering more stylish products which are also user-friendly and, yet, head-turners.

From Yamaha’s point of view, the Fascino is doing the trick here and its owners distinctly feel a sense of pride. It was launched last year and already accounts for a fifth of the company’s scooter sales. It was positioned as an important fashion statement that could hold its own against rival European models. Where the Fascino was different is that it was made uniquely for India with no production facilities elsewhere.

It is this differentiator strategy that Yamaha will focus on going forward in the world’s largest and competitive two-wheeler market. Even if it has made a strong beginning in scooters, Honda is miles ahead with nearly 300,000 units produced each month. Likewise, TVS and Hero are ahead and bridging the gap will not be easy.

Yet, Yamaha believes that with the market rapidly tilting in favor of scooters, there is enough space to grow as a credible brand. There is every likelihood that the share of scooters will grow from the present 30 per cent to 40 per cent over the next three years. In the process, this momentum will help Yamaha as well as other participants in the arena.

Likewise, the premium motorcycle market is growing and the company is in a comfortable position here with its FZ and R15. Quite unlike scooters where it had to spread a new brand message, there is no such obstacle with its powerful bikes that are already well established. The challenge is to ensure that this share keeps pace with the market and competition.

It is only in the commuter space that Yamaha’s pace of growth will face stronger headwinds. Hero is so well established here with its Splendor and Passion, that even its former ally, Honda, has not been able to crack the barrier with its motorcycles. What it has, however, managed to pull off successfully is creating enough momentum for the Activa scooter to emerge as the top two-wheeler brand.

Other manufacturers like Bajaj Auto believe that the key to take on Hero is to offer a differentiated product in the commuter space. This was the thought process for the ‘V’ which is a 150cc bike accompanied by a slice of history in the form of metal from the iconic INS Vikrant. These are early days yet, but Bajaj is reasonably confident that the ‘V’ has kicked off on the right note though there is enormous catching up to do with Hero.

In the case of Yamaha, its commuter motorcycles will have to take on a host of rivals and this is where it has its task cut out. It also explains why the company is focusing on doing a few things right first like scooters, while building on its strengths in premium bikes. Cluttering priorities could just end up in a situation where none of the targets will be met and this is something that the company can ill-afford at this stage.

Quite unlike other markets where its traditional rival has always been Honda, India is a different ballgame for Yamaha as it has huge local competition from a host of players. This puts in context why doubling its market share to 10 per cent will be a tall order. Despite this hurdle, India is a market which the company just cannot afford to ignore by virtue of its immense potential.

It is precisely for this reason, the top leadership believes that the best bet here is work out a timetable, spread across three decades in order to garner a 20 per cent share. The Fascino was an important part of this strategy as also the Saluto, though is in a far more competitive space.

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