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What's wrong with Yamaha Motors?

By , agencyfaqs! | In | September 28, 2000
Nothing, if the company brass is to be believed. However, figures speak otherwise. While sales of its motorcycles have crashed, all major competitors have registered growth

Ritujoy Chakraborty
agencyfaqs!
NEW DELHI, September 28

Consider this. In June 1999, the erstwhile Escorts Yamaha Motors Limited (EYML) sold 18,276 motorcycles. However, in June 2000, EYML sold just 12,398 units, a drop of 30 per cent. In comparison, Bajaj motorcycles registered 64 per cent growth in sales in June 2000 compared with June 1999, Hero Honda posted 38 per cent growth and TVS-Suzuki 14 per cent on the better side.
Significantly, sales of scooters during this period went down by over 20 per cent. However, the sales of motorcycles across the market perked up by around 28 per cent, clearly indicating a change in consumer choice brought about by factors like style, safety and long-term economy. But in this booming market, Yamaha is the only bike-manufacturer (apart from Enfield Motors) registering negative growth. So, what has gone wrong with the company that epitomized biking in this country not too long ago?
Seeing the consistent dismal performance of the company, it wasn't much of a surprise when the share holding pattern in the JV between Yamaha Motors (Japan) and the Escorts Group reversed from 24:76 to 76:24 in favour of Yamaha (on July 7, 2000). More fundamental changes followed. The name of the company changed to Yamaha Motors Escorts Limited (YMEL), the top management was taken over by the Japanese, and the logo changed from the 'E' of Escorts to the legendary 'Y' shaped tuning-fork of Yamaha.
But the million-dollar question is, what will this do in reviving the company's sagging fortunes? While the marketing director was unavailable for comment, we spoke to the second-in-command, R R Prasad, deputy general manager, marketing, YMEL. Declining to comment on company strategy - saying that was the reserve of the men from Yamaha Motors Japan - Prasad seemed a trifle too optimistic on the sales position.
"You must realize that in keeping with the emission norms, we were not allowed to sell our largest selling model, the RX135 (a two-stroker) effective April 1, 2000. It was only in end June 2000, when we attached a hot-tube to the bike to take care of the emission, that sales started again. That explains our drop in figures for the said month. As for our other models, specially the YBX and the YD125 (four-strokers), they are doing remarkably well and have registered 25 per cent growth."
To be taken with a pinch of salt, of course. For one, Yamaha sales did improve in July 2000, albeit marginally. Compare the statistics. Yamaha sold 12,938 bikes in July 2000, about 500 units more than what it sold in June that year. However, it was close to 4,000 units less than what it sold in June the previous year, when its sales stood at 16,076 units.
For another, both the YBX and the YD125 have symbolised Yamaha's woeful tale - good bikes that just didn't catch the fancy of the buyer. Having been introduced in October 1998, the YBX was joined in the stables around a year back by a technically cloned sibling, the YD125. Prasad insists that the since the four-strokers from Yamaha are in the segment of power and style, as opposed to the economy-based 100-cc four strokers that command the lion's share of the market, it would unfair to compare the sales of the two.
The average consumer, however, does not seem to look at it that way, since his needs are still largely governed by economy. Figures speak for themselves. The duo have so far managed to corner only 6 per cent of the booming four-stroke market that constitutes over 70 per cent of the 1.54 million units motorcycle industry in India. Shocking, since the name is Yamaha.
Is it possible that there has been a problem with the communication of the bikes to the customer?
A retrospective Prasad accepts, "Yes, the company got the initial positioning of the YBX wrong. Being a 125-cc bike, it fell in between the economisers at one end and the high-power bikes at the other. Our communication strategy should have been to promote the bike for its pound-per-pound virtues. However, we were bang on with the YD125."
Moreover, Yamaha has lately been extremely thrifty in its ad-promo budget. Apart from an extensive television campaign for the YD125 with cricketer Ajay Jadeja around a year back, the waters have stood still for all models from Yamaha. Now, with the recent movement of the YBX ad-account from long-time agency Headstart to TBWA Anthem, Prasad indicates a renewed vigour in its promotion, both top line and below-the-line. Interestingly, he didn't rule out the possibility of the YD125 account also moving out of Headstart. Where to? No names as yet.
Moreover, there has been zero promotion of the RX135 (a two-stroker). It's only now that the company is planning some campus promotions. It's understandable, considering the inevitable fall in demand of two-strokers due to higher fuel consumption, more pollution etc.
So what does the future hold for Yamaha, the second-largest bike-maker globally, the company which launched the legendary RD350 in the country over 15 years back and created a storm, and most memorably, the company which revolutionised Indian biking with the RX100, the bike which became synonymous with the company?
Prasad crystalgazes and emerges optimistic. "In keeping with international trends, I see the motorcycle industry in India gradually moving away from two-stroke to four-stroke. When that happens, we will be party to that. Of course, there will be a flood of new models from every manufacturer with progressively better technology. As for YMEL, give us time. The new management from Japan is starting to understand the Indian market, and growth targets are being finalised. We may not be the largest bike-maker in India, but we still are the most desired. Don't worry, Yamaha will rise!"

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