The question is why Yamaha has been able to build a stronger position in a smaller market while remaining a relatively small player in a larger one.
Two markets, different equations
Yamaha’s portfolio partly explains its smaller Indian share. “We have completely different market share numbers which we are trying to focus on because we don’t have the 110 cc models,” says Hajime Aota, Chairman, Yamaha Motor India Group of companies. Rather than competing across India’s entire volume market, Yamaha has focused on selected segments. The challenge is to build greater scale within those segments while maintaining its product differentiation.
The cost of being different
The strategy comes with a cost challenge. Yamaha wants to offer products with higher levels of specification and engineering. “If we make the quality more sophisticated, the cost is going to be up,” points out Aota. His objective, however, is to offer a better product for the customers. The challenge extends to suppliers too. Higher technical requirements can increase component costs, even when suppliers have the capability to meet them. Yamaha has to manage those economics in a market where several manufacturers compete for supplier capacity and pricing. “If I were the only person, I could ask the supplier to get this level. But that means increasing the cost,” observes Aota.
Making India more than a market
Yamaha has been investing in capabilities to address this equation. It has invested more than Rs 2000 crore in R&D and manufacturing in India over the past eight to 10 years and has an Indian R&D engineering team of around 280 people. India is also becoming important as an export base.
Yamaha is targeting annual production of more than 11 lakh units in India across domestic and export volumes, with a 70:30 domestic-to-export allocation. The company is looking to combining local engineering with manufacturing and exports rather than treating India solely as a sales market.
R2 is the test.
The recently launched YZF-R2 brings this strategy into one product. Yamaha is targeting sales of around 20,000 units between September and December, followed by a one-year target of 50,000 units. India is the immediate priority, with markets including Japan, Europe and Taiwan being considered for exports. Aota wants the motorcycle to compete globally. But he identifies cost as the biggest challenge. The real test is whether Yamaha can convert India’s scale into product competitiveness to build a position closer to what it has achieved in Indonesia.