March 27 2008

Yamaha has announced an ambitious sales target of 7.78 million units for 2010, which amounts to a 15% share of the world motorcycle market, and an increase of 5 percentage points from the current figure. To make this happen, the firm needs to upgrade its product quality and raise output capacity to benefit from fast-paced demand growth in emerging markets like India and China. 

In India, the world's second-biggest market after China, Yamaha once commanded nearly 40% of the market when it operated a joint venture with a local partner, which was turned into a wholly owned subsidiary in 2001. Afterwards its local performance deteriorated due in part to a delay in introducing products suited for local needs, selling only 120,000 units a year on the Indian market from a total 7.3 million units in annual sales.

India is currently one of the world's most promising markets and it is widely expected to see its motorcycle sales surpass 9 million units in 2010, and move beyond 10 million units in the first half of that decade. Meanwhile, the Chinese market, the world's largest, is forecast to shrink after peaking in 2008 due in part to regulations on the issue of motorcycle registration numbers.

Yamaha plans to release a couple of high-end models annually, while building up its local sales network by opening directly-run outlets in Delhi, Mumbai and seven other major cities by the end of the year. It will also close about a third of its existing sales dealers and add another 150.

The company aims to build the kind of a local network of dealer shops that "We want to finance jointly with local partners willing to bet their fate on Yamaha's future," according to Masahiro Takizawa, senior manager of the firm's corporate planning division. 

Yamaha is confident that its Indian factory will transform into a flagship facility by 2010, operating at 100% of its current annual capacity of 650,000 units and specializing in high-end products.

The company has also been investing in Southeast Asia and South America where its sales are growing at a healthy pace, with factories in Indonesia, Brazil and two other countries now under construction or renovation.

It expects to invest 109 billion yen over the three years through 2010 in plants and equipment in India and other emerging nations, up 50% from the previous three-year period.

Yamaha is also wanting to more than double its motorcycle sales to 800,000 units in 2010 from 2007 in Brazil and three other countries in Latin America. Particularly in Brazil, Yamaha is raising output capacity to offset the negative impact of having lost its timing in capital investment there.

It is also moving quickly to improve sales channels in Columbia and Mexico so that it can import products to these countries from the Indian factory - part of its effort to build a worldwide supply system.

While Yamaha expects the world motorcycle market to expand to 52.3 million units in 2010 from an estimated 46.6 million units in 2007, most of the increase is likely to come from emerging markets in India, China, Southeast Asia and Central and South America. It is counting on intensive investment in these regions to help push up its global sales to 7.78 million units in 2010, hoping that higher sales will allow it to absorb the effect of slowing sales in the U.S. and stay on a growth path.

Source: Nikkienet