“Our focus market is premium and deluxe segment where technology, features, brand can be a differential. Yamaha is a sporty and stylish brand not a price competitive brand. The 110 cc scooter has too many players and no differentiation in terms of features and branding,” Motofumi Shitara, chairman, Yamaha Motor India Group. That’s also why Yamaha is staying away from rural markets.
“Rural markets are price conscious and that’s not our focus market,” he added. Premium scooters are growing and while we sold 2.55 lakh units of 110 cc scooters in calendar 2019, we are looking to sell over 3 lakh units from the new 125 cc. scooters in 2020 (1,92,000 from Fascino 125 FI and 1,16,000. from Ray ZR 125 FI).”
Priced between Rs 66,430-Rs 69,930 (for the Fascino 125 FI), the new scooters are part of Yamaha’s plans to double its two wheeler marketshare from 5% to 10% by 2025. This will require fresh investment in capacity. By 2025, said Shitara, the two wheeler market in India will be 23 million units strong. “We are looking for at least 2 million units,” said Shitara. “Right now we are producing 1 million units but our factory potential is 1.75 million units of peak volume including exports,” He said. Yamaha has invested Rs 1,500 crore in the last 4 years and an additional Rs 40 crore on the BS6 technology alone. Yamaha does not intend to take any more no production days going forward, he added.
The search for capacity has not been hit by the slowdown in India. “India accounts for 40% of global two wheeler demand,” said Shitara. “So it is very important now and as well for the future due to the increase in young population. As for the labour unrest that hit the company’s Oragadam plant, the long-term wage agreement signed with the internal union should settle matters, he said. “Last year’s incident was unfortunate but it’s a new facility and we took steps after several rounds of employee discussions,” said Shitara. This year we signed a long term labour agreement for 3 years. We continue to have regular meetings with internal union to prevent any more problems.”