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Yamaha will focus on BS VI solutions as deadline looms

Murali Gopalan | Updated on February 15, 2018

Yasuo Ishihara, MD,Yamaha Motor R & D India

Big plans Yamaha is keen on looking at a bigger role in India. A view of its Chennai facility

R&D chief Yasuo Ishihara is working with Indian and global teams on developing affordable fuel injection systems

Yasuo Ishihara has his hands full for the next two years.

As Managing Director of Yamaha Motor Research & Development India, his biggest task on hand is to meet the challenge of Bharat Stage VI emission norms, which become a reality in April 2020. This means that Ishihara and his team need to find the best cost balance for fuel injection systems in a market that is the largest globally in two-wheelers and still the most price competitive.

“For this task of BS VI, new fuel injection systems are required but this will mean very high costs. This is a big subject for us at Yamaha,” concedes Ishihara. And this is not because the Japanese auto-maker is short on solutions but will now have its work cut out in arriving at a competitive cost structure.

What perhaps could be comforting is that this challenge will apply to all other two-wheeler players, which have less than 800 days to get their new products up and ready. Yamaha, says Ishihara, has been in talks with ancillary suppliers both here and across its global operations to develop key fuel injection parts at an affordable price. This has been going on since 2015, which only puts in context how daunting the task is going to be.

Euro 5 model?

The company has already readied Euro 5 technology for European countries where the emission requirement is almost the same as BS VI. This was developed in Japan but it is not as if it can be replicated in India overnight. Eventually, low price is the key and this is where suppliers have to go the extra mile.

“Euro 5 technology cost should ideally be reduced and all important components need different material and processes,” says Ishihara. It is here that other countries, where Yamaha has its operations, need to chip in. After all, the exercise is laborious where each and every part needs to be scrutinised and the viability of local manufacturing then explored in detail.

“Ensuring top quality takes a long time,” says Ishihara. “To strive for a complete make in India business model with fuel injection is difficult but small parts can be localised initially. The percentage will hopefully increase in the coming years.”

Going forward, some fuel injection components can be developed in India while others can be imported from ASEAN and, more specifically, regions such as Vietnam, Taiwan and Indonesia. “It is hard to say which specific part will be imported or locally made at this point in time,” he adds. “We do have some ideas but still too early to finalise anything.”

Yamaha’s R&D manpower in India is a little over 100 people with Taiwan the highest with over 250. According to Ishihara, numbers are immaterial beyond a point because Taiwan can cooperate with India on R&D. “The idea is to work together and we believe we can achieve our targets without increasing manpower,” he says.

The fact also remains that India is the most focussed region for Yamaha globally given its sheer size and it is of little surprise that the headquarters in Japan is keen on looking at a bigger role here. At one time, it was just one of the many businesses but is now perceived as an all-important centre for products, global sourcing and servicing markets like Africa.

India needs to catch up

Yet, India has not quite delivered optimally going by the 2017 annual results, which were made public in Japan earlier this week. The company indicated that while Vietnam, Thailand and the Philippines increased ahead of the medium-term management plan targets, India and Indonesia were lagging behind.

This could be an area of concern since these two markets are the biggest for Yamaha across the world. As per the mid-term plan drafted three years ago, the sales projections for Indonesia in 2018 were set at 2.4 million units in a market size of 7.4 million. In reality, this has now been revised to 1.44 million in a shrunken market of 5.4 million. Indonesia has been in free fall mode and it is only lately that it has begun to recover.

In India’s case, the mid-term plan had projected sales of 1.2 million units in 2018 where the total market size was 19 million two-wheelers. Yamaha is now looking at 9,00,000 units in a higher market base of 20 million units, which translates into a share of less than 5 per cent.

Even while it is extremely likely that India will eventually overtake Indonesia in numbers by 2020, the company will have to pull out all the stops in meeting competition from aggressive challengers such as Royal Enfield and Suzuki even while holding its own against stronger participants such as Hero, Honda, TVS and Bajaj.

Beyond 2020, Yamaha will also start looking at a much larger role for BS VI-compliant India, which could by then be a hub for supply of cost-effective fuel injection parts to other parts of the world. After all, other countries in ASEAN and parts of Europe will have to follow the path of clean air and this is where India’s competencies will come in handy.

Electric future

Beyond BS VI is the more ambitious electric plan where India originally envisaged a 100 per cent ecosystem by 2030. This has since been pruned to a more realistic 45 per cent and Ishihara says a feasibility study has now kicked off in India jointly with the Yamaha team in Japan.

He admits that the electric target is “difficult”, which could lead to a completely new business model across manufacturing and retail. However, industry experts say the transition will take time in coming though a handful of new entrants are expected to unveil their products this year. When the momentum gains traction, electric two-wheelers can be picked off malls and through online buying while ancillary suppliers will need to cope with the reality of making fewer parts.

Yamaha has also reiterated that project ‘Indra’ (Innovative and New Development based on Responsible Analysis) will continue to be relevant as a concept in India.

The first product from this drive was the 110 cc Saluto RX motorcycle where Indra focused on precise specifications like styling, performance and costs. “All our products will gradually come into Indra and there have been many actions already on our range here,” Ishihara had said in an earlier interview.

Published on February 15, 2018

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