Yamaha To Make India An Export Hub.

Japan’s Yamaha Motor Co. Ltd plans to expand capacity and export motorcycles made in India to Africa and South America in a bid to turn its local business profitable after more than 25 years.

“We are in a very severe condition,” Hiroyuki Suzuki, the new managing director and chief executive of India Yamaha Motor Pvt. Ltd, said in an interview on Friday. “But we aim to break even by 2013 as we are increasing our production capacity.”

The company manufactures 600,000 motorcycles a year at its Greater Noida plant. “We plan to raise the capacity of this plant to one million and, by 2013, in the domestic market we aim to sell 800,000 units and 200,000 to be exported,” Suzuki said.

Yamaha entered India in 1985, partnering tractor maker Escorts Ltd. In 15 years, it sold 2.5 million bikes in the country, cornering 7.2% of market share. In 2000, trying to compete with more fuel-efficient bikes, Yamaha started making low-end models. Its market share fell to 3.6% by 2005-06, and to 2.35% by 2010-11. In the 11 months to February, however, sales rose 22.55% to 251,762 units on the back of India’s economic growth. The company has sold more than five million motorcycles in India to date, a spokesperson said.

“The problem with Yamaha... has been of establishing a single brand in the Indian market like (Bajaj Auto Ltd’s) Pulsar, (Hero Honda Motors Ltd’s) Splendor or Passion,” said Jatin Chawla, sector analyst, India Infoline Ltd, a Mumbai-based brokerage. “Also, they went into the entry-level segment, where you have volumes but no margins. So, Yamaha could neither gain volumes nor margin.”

Suzuki said he plans to sort these issues over the next two years. Yamaha, he said, is doing a feasibility study to make India an export base for Africa and South America.

“The African markets need basic models such as Crux and FZ and we will export YBR to South America. In Africa, you see three types of motorcycles—mopeds, scooters and street models of motorcycles. These motorcycles are also used for commercial purposes. I mean a rider can have two pillion sitting behind him and he can charge fare from them. So, we will have to change specifications of the bikes, which we plan to export,” he said. Suzuki said the company will also strengthen its research and development division in India with the help of Yamaha Japan to support its export plans.

Up to one million bikes are sold in Africa annually, according to Sugan Palanee, senior partner, auto practice, Ernst and Young Africa. Bajaj Auto, the only Indian motorcycle manufacturer that exports to Africa, has around 25% market share in the entry-level segment; Chinese manufacturers have the rest.

Suzuki said Yamaha plans to diversify in India too. “We may need at least two years before we come up with a scooter in the 150cc segment,” he said. “Going forward, we will bring in motorcycles in the range of 200-250cc.”

Source : livemint.com