For Yamaha, premium is key for India and emerging markets 

by Murali Gopalan 01 Aug 2022


Eishin Chihana inaugurates a BLue Square dealership at Thane, near Mumbai

Yamaha will convert all its showrooms across India into Blue Square outlets by 2025. According to Eishin Chihana, Chairman, Yamaha Motor India Group, the target is to have 800 such retail points in place over the next three years. 

The company has nearly 75 such Blue Square outlets in place right now which coexist with regular run-of-the-mill dealerships which are in the region of 700-odd numbers. All these will be upgraded to Blue Square along with the new exclusive ones being planned nationally.

Chihana was present for a recent inaugural of this outlet in Thane near Mumbai where he took some time off to speak to a handful of journalists. He made it clear that with Blue Square, the message being conveyed was to feel the premium feel of Yamaha. Customer experience of the brand was paramount in these outlets which also have accessories and apparel to offer.

Blue Square as a concept was the brainchild of Motofumi Shitara, Chihana’s predecessor who is now back at headquarters in Japan. It was part of the transition of Yamaha as a brand and to act true to its DNA. Till that point in time, the company had dabbled in various segments but the time had come now to stick to the premium space both in motorcycles and scooters.

Blue Square showrooms are designed to offer a sense of community, creating a space for customers to connect with the ethos of the brand. It has been designed to define the legacy of Yamaha’s role in global motorsports with ‘Blue’ characterising the brand’s racing DNA and ‘Square’ defining an entry into the world of Yamaha.

A focused approach
Chihana said Blue Square had also caught the fancy of Yamaha dealers in Nepal which meant customers in the region also wanted a more focused approach in buying bikes and scooters. The company’s recently launched Aerox 155 scooter, for instance, is only sold at Blue Square outlets which now account for less than 10 percent of its overall retail presence in India.

“When our electric scooters debut, they will also be part of Blue Square,” reiterated Chihana without getting into specifics of their time of entry in the future. All that is known right now is that Yamaha is keen on getting onto the electric bandwagon but would much rather carry out exhaustive tests before offering its range to the market.

The focus on premium goes beyond India to all emerging markets as the company has articulated in its Integrated Report of 2022. “One of the themes in our new medium-term management plan is to leverage the recovery in demand and our premium segment strategy to improve profitability,” it has stated.

According to this report, overall two-wheeler demand in Asia has yet to recover to pre-pandemic 2019 levels. “Our first step over the next three years will be to accelerate initiatives in anticipation of a recovery in demand. In ASEAN markets and in India, we will target the upper-middle class, which is expected to grow rapidly over the next 10 years, and ramp up our premium segment strategy even more than before to solidify our advantages,” states Yamaha. 

Connected motorcycles
As it continues to aim for higher unit sales growth, Yamaha will carefully map out strategic segments in each country and not only offer attractive products but also launch “stronger brand marketing initiatives” to create firm ties with customers.

“For customers in this segment who, through digital media, value individuality and self-actualisation, we will combine the digital and real worlds to implement our one-to-one marketing approach,” the Integrated Report points out. The idea is to target each individual customer in order to expand “our range of touchpoints and to strengthen the relationship with our customers”. 

To accomplish this, Yamaha wants to expand sales of connected motorcycles to 2.5 million units by 2024. It also plans to “roughly double” the number of premium dealerships in India, which serve as “real points of contact” with customers.

“As we aim to improve profitability by forging ties between customers and the Yamaha brand by using digital technologies, we will accelerate the implementation of our premium segment strategy targeting the upper-middle class in India and ASEAN markets,” states Yamaha.

For this fiscal, it expects to see continued strong demand in Europe for motorcycles in developed markets and an “ongoing recovery” in demand in emerging markets. The company plans to increase production and sales, but “there are risks” such as high raw material prices and supply shortages of semiconductors and other components. 

“We will therefore continue working to build stable supply systems, pass on price increases, and improve cost efficiency. Moreover, in the recreational vehicles business, we plan to increase our brand strength and expand market share,” it has said.

There are risks in the form of component shortages and logistics issues in North America where Yamaha’s production facilities are located but “we will strive to minimise missed sales opportunities as we did last year”. In the smart power vehicles (SPVs) business, despite the same risk of component supply shortages as the motorcycle business, demand is projected to continue expanding. 

“We are forecasting sales growth through an expansion of sales of both OEM and Yamaha-brand products. From a medium-term perspective, one of our themes is to generate synergies between the three businesses of motorcycles, recreational vehicles and smart power vehicles,” states Yamaha in this report. The ultimate goal is to deliver solid profits with the core business of motorcycles and double the sales of SPVs.

The Japanese automaker is also keen on expanding its asset management business with local partners and collaborators in India and Nigeria. As elaborated in the report, among its customers in emerging markets who work with motorcycles, a certain number of them borrow bikes from their employer and provide labour. 

“We have established an environment that enables the use of motorcycles without purchasing them as a business, and we are working in collaboration with startups to build an ecosystem that creates jobs,” it has stated. The asset management business enables customers to boost their standard of living while securing a stable income by acquiring mobility. 

At the same time, Yamaha hopes to increase its sales as a service-based business for customers who have previously been unable to purchase a motorcycle with their own funds.

Motofumi Shitara, who was at the India helm as Group Chairman for four years, is now Director, Corporate Planning and Financial Affairs at Yamaha Motor Co, Japan. His views have also featured in the Integrated Report of 2022 where he believes the demand environment will remain favourable and sales across all businesses will surpass those recorded in 2021. 

“We have accounted for the impacts of the shortage of semiconductor components and the effects of soaring costs for raw materials, logistics, and more, both which have persisted since fiscal 2021. To successfully weather this environment, our capacity to carry on with and fully institute our breakeven point management style, while at the same time enhancing product competitiveness and driving our premium segment strategy forward, will be called into question,” says Shitara in the report.

However, through such initiatives, Yamaha aims to post record-high net sales and operating income numbers for the second consecutive year. He has noted that the pandemic has “drastically altered” people’s values, while the increased pace of digitalisation is “heavily influencing” consumer purchasing behaviours. With people now able to obtain the same information worldwide “regardless of time zones”, marketing methods have clearly changed as well.

“The company intends to accurately gauge these various changes in order to update our business practices and increase efficiency, and this is an area where establishing our breakeven-point management style can demonstrate the fruits of our labour — in terms of financial health and success — to everyone,” elaborates Shitara. 

Sustainable world
Yet, it is also important for Yamaha to contribute to the creation of a more sustainable world at the same time. According to him, his role is to cultivate the seeds of growth “we have sown and to orient our work” around the financial foundations further strengthened through the previous medium-term management plan.

“It is vital that we ask ourselves if our products and services truly make our customers feel they gain greater happiness with a Yamaha. I believe that doing this should naturally result in the company achieving sustainable financial growth,” says Shitara. 

Consequently, the company will endeavour to bring itself closer in line and in sync with the values “our customers hold” especially as Covid-19 becomes more endemic. Communicating this fact to all stakeholders is how “we will share the progress we make toward achieving our long-term vision”.

Yamaha Motor Co’s top boss, Yoshihiro Hidaka who is President, CEO and Representative Director has indicated in the Integrated Report that Russia’s invasion of Ukraine has “fractured the global community”, resulting in a reversal in the prior trend of economic globalisation and a return to an economy “separated into multiple blocks”. In response to this, Yamaha Motor will strive to ensure that its supply chains can function properly “under any circumstances” while keeping a close eye on global trends. 

Concurrently, continues Hidaka, the company is reviewing its production and R&D networks from the perspective of risk management and then taking quick action to rectify any issues identified. “The operating environment remains opaque. Nonetheless, we are firmly committed to achieving the targets in the new medium-term management plan and will move forward with certainty in our ability to do so,” he adds. 

According to Hidaka, the corporate culture of Yamaha Motor is one of taking on challenges. “When I first became a manager, I proposed to my supervisor that we transfer all scooter production, which was conducted in Japan at the time, to Taiwan. He told me to do it myself, entrusting the entire project to me. I made many other proposals in the years that followed, and for the most part, I was allowed to chase my ambitions as I desired,” he narrates.

As the Yamaha chief puts it, this culture is one in which any employee with passion and drive is encouraged to chase their ambitions, regardless of their position or gender. It is for this reason that he is hopeful that everyone within the ecosystem will continue to tackle challenges “in ways true to our unique style”. 

By doing so, it will go a long way in realising the long-term vision for 2030 of “ART for Human Possibilities: Let’s strive for greater happiness”. ART is an acronym for Advancing Robotics, Rethinking Solutions, Transforming Mobility.

 


magazine image

Latest Auto industry updates and news articles