afaqs!

Yamaha steps on the gas

By , agencyfaqs! | In | December 05, 2000
Yamaha launches the four-stroke Crux for the economy market, even as unconfirmed reports say that the company is planning to turn YMEL into a 100 per cent subsidiary

Sabil Francis
agencyfaqs!
NEW DELHI, December 5

To sell a lot of bikes, you got to sell them cheap.

It took four years of market research into Indian conditions and customer profile for the Japanese company Yamaha Motor Corporation to realise this, but now the company is moving briskly. It has launched the Crux, a four-stroke motorbike, to tap into the volume segment of the Indian bike market. The Crux costs Rs 41,300 (Delhi, ex-showroom). The four-stroke engine is also seen as less polluting, and more in line with the India 2000 emission norms that came into force in April this year.

All this comes in the backdrop of unconfirmed reports that Yamaha Motor Corporation - which in April 2000 bought another 24 per cent stake in the 50:50 joint venture it had with the Nandas changing the equity pattern to 74:26 - is now planning turn the JV into a 100 per cent subsidiary.

In perhaps an indication of times to come, the press conference called to announce the launch of the Crux was an all-Japanese show. The name of the company has already been changed from Escorts Yamaha Motor Limited (EYML) to Yamaha Motor Escorts Limited (YMEL) earlier this year. Yamaha officials were quick to deny any buy-out plans, saying that they were happy with the Indian partner. However, informal conversations that agencyfaqs! had with some dealers indicated that the Indian arm is getting sidelined.

If that happens, Yamaha would be coming in full force in India at the right time. It is estimated that the motorcycle market will grow by over 30 per cent next year. Currently there is a total annual demand of four million units, making India the world's second largest two-wheeler market, after China.

Moreover, since 1994, restrictions on motorcycles in China have tightened. Roughly half of all Chinese cities now either prohibit or restrict motorcycle registration. India has thus emerged as the destination of choice for motorcycle manufacturers. "We now view India as one of the most important countries in the world for us," says Takehiko Hasegawa, president, Yamaha Motor Corporation. Not without reason. Last year, the overall market for motorcycles grew by 28.6 per cent.

And YMEL has done quite well in the market. For example, from April 1999 to February 2000, the company's sales surged by 34.1 per cent to 2.2 lakh motorcycles against 1.6 lakh units in the same period the previous year. Worldwide, motorcycles made up 45.8 per cent Yamaha's total production in the period from April 1999 to March 2000. Company officials say that they plan to corner at least 15 per cent of the 22 to 25 lakh motor cycles that are expected to be sold in India the next year.

Yamaha sees the Splendour, the Kawasaki, and TVS-Suzuki as its main competitors, and will compete both on price and on features. Says T. Suganuma, managing director, YMEL, "We will concentrate on growing the brand name, focus on the customer, and aggressively compete." The Crux is aimed at the economy buyer, who looks for reliability, economy and brand name.

© 2000 agencyfaqs!