Yamaha readies new growth blueprint for India business

Yamaha Motor has targeted production of 1.5 million bikes and scooters in India by 2021, according to its new medium-term management plan released in Japan earlier this week.

This will mark a remarkable jump in numbers from the present level but is still way behind competition in the form of Hero, Honda, TVS and Bajaj. The good news from Yamaha’s point of view is that the new midterm plan reflects a certain aggression about India at a time when things seemed in slow motion for a while now.

For calendar 2019, the plan is to produce a little over a million two-wheelers for both the domestic market and exports. Of these, motorcycles will account for 4.1 lakh units with scooters taking up 3.7 lakh units. Exports will account for the balance 2.9 lakh units.

However, there will be a bigger jump over the following three years, which is projected to see production of 1.5 million units in all, including exports. This will comprise 6.5 lakh motorcycles and 5.4 lakh scooters while international shipments will account for 3.3 lakh units by end-2021.

By this time, though, the Indian two-wheeler industry will have entered the Bharat Stage VI emissions era (they come into effect from April 2020) and total production could be closer to the 25 million unit mark. In this backdrop, Yamaha’s share will still be minuscule but a welcome revival from the inertia seen in recent years.

The midterm plan also states that the facilities in Chennai and Surajpur will be better streamlined in rolling out motorcycles and scooters. The work on localisation will continue in right earnest, which means that the costing structure will be competitive. This will ensure that India will remain an important beachhead for sourcing components globally.

It is still a moot point if end-2021 will see the country emerge the largest market globally for Yamaha. Perhaps, this statistic is not as important as getting things in place first. This means realigning business priorities and establishing the Yamaha DNA in its new line-up of premium bikes and scooters.

During a Q&A session with analysts in Japan some months ago, the company had said it was preparing to release an all-new line-up of scooter models in India “in anticipation of the introduction of BS6 (emission standards equivalent to Euro 5) in 2020”.

In a specific reply pertaining to the Indian motorcycle business, Yamaha admitted that it had been “struggling to grow our retail sales, only growing by four per cent compared with the previous year”.

This was happening even when market growth in the scooter segment had been high but the company’s retail sales “have only grown a little”.

“We keenly understand that we need to work tirelessly to make many improvements to increase product competitiveness in this segment,” Yamaha had stated. The good news, though, was that sales in the motorcycle premium segment, with models like the R3, R15, Fazer25 and FZ-25,were growing and significantly contributing to profitability improvements in the Indian business.

It is a view that is seconded by Motofumi Shitara, Yamaha Motor India Group Chairman. He told this writer during an interview some months ago that the brand needed to be better recognised in India. “We need to be more appealing and this only means that the Yamaha brand differentiation is not so clear in India,” Shitara had said.

In his view, India was a market with very high potential and changing rapidly with more young people coming in to buy motorcycles. This meant a huge opportunity for the company with its sporty and stylish products. “My responsibility is to convey the message of performance and excitement. India’s younger generation also want more in innovation, which means we should think harder,” he said.

According to Shitara, Yamaha is an attractive brand for the Indian customer though it had not been able to leverage its value optimally. “There is a lot of energy here with young buyers. Indians should eventually like buying Yamaha products and this is what I aspire for as a commitment and target,” he said. The intent has clearly been articulated in the midterm plan, which means that there could be some interesting action ahead. The scenario post-BS VI will be a good time to put the house in order all over again. After all, Yamaha has its strengths in fuel injection technology and will strive to woo the customer all over again with its competencies in this space.

It will also pull out all the stops in ensuring that it can meet the costing challenge in the BS VI era since this will be an important factor in a price-sensitive market like India. Beyond this, the renewed focus on premium bikes and scooters will hopefully draw customers all over again to Yamaha showrooms.

The Japanese auto-maker has reasons to be optimistic. India is the largest two-wheeler market in the world and growing at a reasonably brisk pace. There are a host of young buyers for motorcycles and, in recent times, for premium options. Companies like Royal Enfield, in particular, have hit the bull’s-eye in staying true to their DNA of mid-size motorcycles and reaping rich dividends in the process.

The Yamaha India chief clearly knows what is the need of the hour. The challenge, though, is to put this thought process into action quickly since competition is intense, be it from local players like Hero, TVS, Bajaj and Enfield or fellow Japanese manufacturers like Honda and Suzuki.

Yamaha is a brand whose DNA does not have to be redefined in India solely for reasons of growing market share. It has already erred in getting into segments where it just ended up being another participant in the ring. The idea is to stand out even if it means that volumes will be slow in coming.

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