Clear Roadmap For Success
Eishin Chihana is a man on a mission. Since taking charge as chairman of Yamaha Motor India in November last year, he has criss-crossed several states, towns, districts and villages with a single-minded focus. He wants to understand the needs and requirements of the diverse Indian population with regard to mobility, particularly two-wheelers. Of course, he has been tasked with making the India operations continuously profitable on a quarterly basis. The bigger aim is to more than double the turnover of Yamaha Motor India in the next five years. A stiff target indeed, but he is confident of achieving that.
Yamaha is an important player in the Indian two-wheeler market. It is, in fact, a leading exporter of 'Made in India' bikes and scooters. In the domestic market, it just crossed the Rs 7,000-crore-mark in revenue, generating a small operational profit, industry insiders say. This has been made possible by shifting focus from the mass market two-wheelers to more premium offerings.
Yamaha Motor made its initial foray into India in 1985 as a joint venture with Escorts. In August 2001, it became a 100 per cent subsidiary of Yamaha Motor Japan (YMC). In 2008, Mitsui & Co. entered into an agreement with YMC to become a joint investor in India Yamaha Motor (IYM). IYM makes its bikes and scooters at its two state-of-the-art plants at Surajpur (Uttar Pradesh) and Kanchipuram (Tamil Nadu).
"This is the first time that I have been assigned the responsibility to manage the two-wheeler operations in the Indian market. Before November 2021, I was in charge of Southeast Asia and other markets like Europe, United States, Japan, and Australia," he says, sitting in the first floor meeting room at Yamaha’s Surajpur plant in Uttar Pradesh. It is adjoining the office of the chairman. The floor is an open office with hundreds of work stations. Chihana continues: "The Indian operations are well known among the Yamaha Motor group of companies because we have our second largest factory here next to Indonesia."
Until this interaction, Chihana had covered more than 20 cities and 70 Yamaha dealerships to understand the Indian market. "In terms of customer demand and expectations, every market is different. India is a young and energetic market, where everyone likes riding two-wheelers," he says with a smile. Perhaps that is the reason Chihana is carefully treading the market. Recently, he hinted that one of the most iconic bikes of yesteryear, the Yamaha RX100 may soon hit the roads again but in a new avatar. Of course, it will take some years as the bike needs an engine that will be BS-VI compliant.
But the bigger game for Chihana is to focus on premium price points. And he has some advantage at hand.
Sufficient Capacity, Clear Strategy
Between its two manufacturing plants, Yamaha has a combined capacity to manufacture over 1.5 million units per year. In the past two years, it has been utilising virtually half the capacity. It does not need to pump in money for expansion. At least not immediately. The infrastructure at these plants supports production of two-wheelers and parts for the domestic as well as overseas markets.
IYM is highly customer-driven and has a countrywide network of over 2,200 customer touch-points including 500-plus dealers. Presently, its product portfolio includes sports models such as blue-core technology enabled models such as YZF-R15 version 4.0 (155 cc), FZS 250 CC, FZ 250 CC, MT-15 V 2.0 (fuel-injected 155cc), fuel-injected 125cc Scooter Hybrid Range of Ray-ZR Street Rally 125 Fi and Aerox (155 cc), among others.
Commuter motorcycles and scooters make up for 60 per cent of the Indian two-wheeler market. "If we try to chase volumes, the average price of a commuter motorcycle is too cheap as compared to global standards. Some of our competitors are gaining profits by selling big volumes. However, if Yamaha tries to follow the same model, we will be incurring losses due to low product prices," says Chihana.
In fact, till 2017, Yamaha was following that path and made efforts to increase sales volumes. However, from 2018, the company changed its strategy and under ‘The Call of the Blue’ brand campaign, it began targeting the premium segment. "Since then, our focus has been on 125cc scooters and 150cc motorcycles. This way, 30-35 per cent of the market falls under our target area," he adds.
Before 2017, Yamaha Motor India had been struggling, admits Chihana. Why? “Because we were chasing volumes. Since 2018, our operating profit percentage has been increasing. The reason is because of Yamaha’s shift towards the ‘premium segment’,” says Chihana.
Yamaha Motor India had a remarkable turnover last year, even though volumes were lower than those in 2017. According to the company, it sold a total of 7.9 lakh units in Calendar Year (CY) 2021 of which 5.22 lakh units were sold in the domestic market while 2.68 lakh units were exported.
“Compared to CY2021, 2022 looks even better,” says Chihana. “Last year we sold a lot of scooters, but this year MT-15 and R15 have been bringing in good sales. In CY2022, we expect to grow 25 per cent in revenue terms,” Chihana says with confidence. His plan is to keep up the sales momentum of 25 per cent in each of the next four-five years.
EV Strategy?
Most of the leading two-wheeler manufacturers have already launched electric variants in the market. A few pure EV players are already selling more EV scooters. Why is Yamaha Motor India not launching any EVs? “We are already producing electric scooters for Europe. For the Taiwanese market, we have Yamaha electric scooters that are made there,” Chihana adds. So, why not import and launch your EV in India? “We can import from those countries. However, we must factor in the Indian road and weather conditions, customer usage and the high temperatures in the summer. Heat management is very important. From tyres, performance, cruising speed or charging speed, everything is linked to heat management. In the long run, producing EVs in India seems like a more realistic option, especially when we have so many suppliers in India,” he says.
The company expects to launch a ‘made-in-India’ EV in under three years. In the meanwhile, it is open to importing and adapting an electric scooter. Industry insiders speculate that a premium, high-end electric scooter may be launched by Yamaha during the upcoming festive season.
Going forward, Yamaha will target urban and semi-urban areas, where the need for aspirational products is on the rise. “We will continue to offer sporty and stylish motorcycles, rather than producing two-wheelers used only as a mode of transport,” says Chihana. Yamaha will continue to target young buyers looking for premium products in the 125-150cc premium space, with well-established products like the FZ range, YZFR15, MT-15 in motorcycles, and AEROX 155 and the Hybrid 125cc Fascino and RayZR scooters. Yamaha is also looking to launch some new products towards the end of this year or early next year depending on market conditions. We will keep you posted on company developments. Watch this space.
Eishin Chihana, Chairman, Yamaha Motor India tells ASHISH SINHA about the company's EV push and more. Excerpts:
Is there a genuine demand for EVs beyond the metro cities?
There has been a rapid rise in EV demand from last few years. Even the government has rolled out schemes to push the EV demand. Though the market size may be around 3-4 percent now but in another 5-7 years, it might increase to 8-10 percent. And in a market like India, 8 to 10 percent will be huge owing to the size of Indian two-wheeler industry. To cater to such demand, we must be prepared.
In that case, aren’t you already late in India?
We don’t want to do anything in a hurry. Our target is to make electric scooters really usable and trustworthy while creating aspiration under the Yamaha brand. We are already producing electric scooters for Europe and for the Taiwanese market. Importing and launching here is an option. Heat management is very important. So, for importing scooters, we will have to make some adjustments. The cost will become a factor then. In the long run, producing EVs in India seems like a more realistic option. Yes, our plan is to introduce a premium segment EV in India.
Have you earmarked any investment for manufacturing EVs from India?
Not yet! We are still in the studying stage. It will depend on the type of body, chassis, design that we want to introduce in the Indian market. Because, we have many types of EVs that are being sold abroad. We are discussing this very closely with Yamaha Japan.
Will you be making any further investments in India?
Yes, it is very likely. It will depend on volumes. Currently, our installed production capacity at both the plants is 1.55 million units per annum, of which we are utilizing up to 50 per cent per annum. We can expand our production facilities in Chennai to meet the future market demands. The amount of investment will depend on how many products we are producing after 2026. The final decision will be taken on this in coordination with YMC Japan.
