The Japanese two-wheeler maker refers to initiatives planned for India and Nigeria in its recently unveiled midterm plan
26 Feb 2022 | 4836 Views | By Murali Gopalan
India finds an interesting mention in Yamaha Motor Co’s medium-term management plan (2022-24) presented in Japan on February 10.
“In the area of mobility services, we will establish new companies in India and Nigeria and expand our asset management business through collaborations with local partners.”
The significance of ...
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India finds an interesting mention in Yamaha Motor Co’s medium-term management plan (2022-24) presented in Japan on February 10.
“In the area of mobility services, we will establish new companies in India and Nigeria and expand our asset management business through collaborations with local partners.”
The significance of this statement is still not clear though a press release issued more recently refers to Moto Business Service India (MBSI), a mobility solutions company, whose stakeholders include Japan’s Yamaha Motor Co and Yamaha Motor Biz Partner Co.
MBSI has invested in RoyalBrothers, a leading bike rental company, where it will pro-cure new two-wheelers and deploy them on a revenue sharing basis model. MBSI will al-so work with companies keen on deploying electric two and three-wheelers.
Whether these two news announcements are linked is a moot point but the fact re-mains that Yamaha is more than keen to grow its presence in India through a host of business models which go beyond ownership options alone. The delivery business is only a natural entry point because this is where all the action is taking place especially with a host of startups keen on making their mark.
Not everyone can afford to buy a two-wheeler and would rather rent them instead. This is where MBSI’s mission to “increase the usage of vehicles on shared/rental plat-forms” becomes relevant.
Getting back to its midterm plan, Yamaha has said that its main task is to improve profitability by continuing with the premium segment strategy in markets where de-mand is recovering. While total demand in Asia has still not fully returned to where it was in 2019 before the pandemic, the new plan will accelerate efforts in preparation for a recovery.
“In ASEAN markets and in India, we will target the upper-middle class, which is ex-pected to grow rapidly over the next 10 years, and ramp up our premium segment strategy even more than before to solidify our advantages,” the company has stated.
And while it aims for higher unit sales growth, Yamaha will carefully map out strategic segments in each country and not only offer attractive products but also launch stronger brand marketing initiatives to “create firm ties” with customers.
In India, Yamaha will aim to double the number of premium sport models sold and “roughly double” the number of Blue Square premium dealerships which serve as “real points of contact” with customers.
In Indonesia, it will look to increase the number of premium scooters by 1.3 times to “form a new bedrock of operations”. As for the Philippines, the target is to sell 1.5 times the number of units by strengthening premium scooter segment offerings.
“To summarise, we will aim to improve profitability by forging ties between customers and the Yamaha brand by using digital technologies and by accelerating implementation of our premium segment strategy targeting the upper-middle class in India and ASEAN markets,” Yamaha has stated in its presentation of the 2022-24 plan.
Even while its market share in this part of the world continues to be in single digit fig-ures, the Japanese two-wheeler maker has now decided to focus solely on its DNA of premium offerings. This has been a long overdue shift in India from the time it seemed to have lost direction and strayed into a host of segments in its attempt to build mar-ket share.
Clearly, Yamaha believes the customer pool for its premium bikes and scooters will grow which explains why it is hopeful of doubling numbers in India by 2024 as articu-lated in its midterm plan. The reasoning is based on the fact that affluence levels are increasing and there is a growing base of riders willing to spend more so long as they are happy with the product.
Yamaha has also chosen to focus on the premium end in scooters and the recent launch of the Aerox 155 is a pointer in this direction. Going forward, it is likely that the com-pany will contemplate more powerful options since this strategy will help it stand out as a differentiator in an intensely competitive market like India.
In its Q&A session with analysts in Japan on the outlook for 2022, the top manage-ment has indicated that the risks include “soaring” raw material and shipping costs. The sharp rise in the price of precious metals, such as rhodium, has had a “particular-ly large” impact too.
Yet, opportunities beckon in the form of strong demand and Yamaha is hopeful of boosting profits through cost reductions and passing on price increases. On the motor-cycle business in ASEAN, amidst the recent expansion of Omicron, governments have “changed their direction to live with Covid and keep the economy running”.
As for the chip shortage, since April last year, Yamaha has been able to work with most of its business partners to either change specification/designs to switch to avail-able semiconductor parts or receive timely procurement.
“As a result, we believe that we will be able to resolve the risk of production cutbacks due to the shortage of semiconductor parts in the second quarter and recover from the first quarter production cutbacks,” states the management.
Aside from the impact of semiconductors, the company expects demand to recover gradually as opposed to an instantaneous recovery. However, if demand is strong, “we will be able to respond without problems in terms of production”.
The midterm plan also makes a reference to the “prolonged global Covid-19 pandemic” which has changed peopleʼs attitudes about travel and movement and triggered a shift in preferences to staying “closer to home and avoiding crowded spaces”. This has re-sulted in a spike in demand for small personal mobility.
“With this being the case and also due in part to a growing preference for more eco-friendly means, the e-bike market in Japan, the US and Europe is growing at an annual rate of 18 percent.” Yamaha believes that the product segment will continue to grow at this pace as “we head toward 2030”.
Hence, projections for these principal markets are “for a scale exceeding 10 million units by 2024” and the company will aim to expand its business scale at a “rate that outpaces the marketʼs growth” and double net sales by offering clients customised e-kits and new brand models.
There is no mention of India where Yamaha tied up with Hero Cycles for e-bicycles in late-2019. This is a growing market and it will be interesting to see how the bonding grows between the partners.
The midterm plan also makes a reference to HR where Yamaha intends to create an en-vironment where people of diverse backgrounds gather and excel by expanding “our training programmes for leaders in each country, revamping the HR system at our headquarters, enhancing mid-career professional recruitment, and more”.
The company also plans to set targets for the ratio of local employees in core positions at overseas subsidiaries and for the ratio of women in management positions globally.