Saturday, March 31, 2007

Future's bleak for Yamaha?

This write-up is based on the article 'Yamaha may race one last lap in India' on Moneycontrol.com.

According to the article:

  1. Yamaha India is sitting on accumulated losses of Rs1000 crore
  2. Yamaha plans to put in another Rs800 crore over the next four years and may churn out a 250 cc bike at the next Auto Expo. It will ramp up the capacity from the existing 3 lakh units to 10 lakh units by 2010.
  3. Yamaha's new Managing Director, T Ishikawa, better known as the man who turned around Yamaha's Thai operations says the company is in the process of realigning its India strategy. He says, "When I joined in Thailand, things were just like what they are in India. Cost and features is what they looked at then i introduced unique models, created niche market. All we did was tried to sell lifestyle not just product."
  4. In the pipeline, is to create a niche market in the 200 to 250 cc category. Yamaha is also exploring the possibility of hitting the market with high-end performance bikes.
  5. Market is abuzz with rumours of a possibility of a Bajaj - Yamaha alliance. While the company has not denied a possible tie-up, the timing may be bit premature.
  6. Alliance or no allaince, Yamaha will bring in R1 and R6 by the end of the year. But its plans to launch a scooter seem to have been shelved for now.
How should one explain to these Japanese Yamaha Presidents and Managing Directors that Indian bikers are mature, knowledgeable, perceptive and most importantly enthusiastic enough to lap up sporty and performance bikes? If that were not the case, how does one explain the continued attempts to model new styles out of the existing ones. My take: Yamaha could be too late to launch new bikes if they plan to do it in Auto Expo 2008. Also, the parent Yamaha company is making losses in its worldwide operations. At such a juncture, it would be foolhardy to ignore good volumes. Therefore, only pushing bikes in 200-250cc category might not be the greatest strategy.

Yamaha must also understand that India could have a very different dynamic because demand for two-wheelers here in India far outweighs the demand in Thailand. So instead of restricting itself, it should simply try to introduce performance bikes for the masses too. They might not get Hero Honda or Bajaj like volumes but certainly they'll get a good chunk to sustain their operations. Failure to do so until now doesn't mean people have stopped liking Yamaha products or they don't look forward to Yamaha products.

In the end, if Yamaha captures a fair amount of market share in terms of volumes in India, it would be good enough to turn around its fortunes in its worldwide operations too.