As Yamaha prepares for a new leadership change in India with Eishin Chihana taking over as group chairman, it has reiterated that the focus on the premium segment will continue. This is part of the growth template created by Chihana’s predecessor, Motofumi Shitara, who will now take on a new role at headquarters in Japan.

“The deluxe and premium segments (in India) are growing and unit prices there are rising in turn. Accordingly, our strategy is not to compete in the low-end affordable commuter model segment but to instead pick and focus on our forte as we carry out our premium segment strategy,” said Takuya Kinoshita, Chief General Manager of Land Mobility Business Operations, Yamaha Motor Company, at a recent investor presentation in Japan. 

According to him, the automaker will also pay specific attention to scooters as part of the India strategy. Instead of going through “a simple price war”, it would much rather develop itself into a premium brand while communicating the message from a customer perspective. The goal is “to fortify our brand positioning” and thereby aim for greater scooter sales.

This puts in context the launch of the Aerox 155 which is intended to be part of a premium category in scooters. Even while Yamaha has products in the commuter space, the plan for top-end scooters has been drafted keeping in mind that Indian customers will have greater disposable incomes in the coming years. It is this young and aspirational generation that will seek to stand out in a crowd and l be more inclined to go in for premium options like the Aerox 155. 

Yamaha has also acknowledged that looking at total demand market trends for the country, the figures 
recorded for 2021 have not yet returned to the level of 
those in 2018. Yet, it expects the numbers to “return to similar levels” over the next three years. 

“We want to strengthen our relationship with the customers from the pre-purchase stage through to the post-purchase stage, either through digital transformation or the real world with our sales network, and thereby also increase unit prices in India. We will also aim to raise net sales using this as an overall business model not only for our products but also our related businesses,” said Kinoshita.

Growing brand connect in India
Later during the Q&A session that followed the presentation, the management pointed out that Yamaha has the second largest share in the premium segment of the Indian market with good response to its YZF-R15 and MT-15 models. “While we hold just four percent of India’s total share, we stand at 15 percent in this segment,” it said.

Additionally, the Yamaha brand recognition is “extremely high” and the Call of the Blue brand messaging and activities have raised awareness “by communicating that Yamaha is the sport bike brand. Sales of the Aerox, which is built on the same platform as the NMAX, “are trending favourably” though it is still primarily for daily use. 

“Going forward, we believe scooters will also shift to premium status like motorcycles are (presently) as incomes rise. If we can introduce such models ahead of others and create demand, we will be in an advantageous position,” stated the management. 

Yet, there is also the reality of the earnings scale in India which is still falling short and this is where Yamaha will examine possible factory consolidations while reviewing fixed costs. “Since the business structure itself is improving, if we can raise sales volumes, our profitability will rise as well,” it said. 

Equally, admitted the management during the Q&A, it is difficult to increase sales in India by merely introducing new models and running advertisements. “Consistently running regional campaigns and the like were extremely important in India previously, but we cannot do these like before due to the pandemic. We have, however, resumed conducting small-scale activities in limited areas,” it said. 

Across most of Asia, Yamaha is seeing more and 
more customers in the upper-middle class and this is contributing toward the higher ratio of premium-priced model sales. “The upper-middle class in Asia is now a speciality segment for us and we plan to bolster our marketing efforts from here onward to make it a stable source of earnings,” said Kinoshita. 

In 2020, wholesale shipments to emerging countries fell due to the impact brought about by the pandemic. At present, both total demand and unit shipments are “trending toward recovery but situations differ greatly” across regions. “Still, we have not yet returned to the previous levels seen in 2019 and 2017,” he added. 

As he explained, it is difficult to “read the pace of 
the recovery from here onward” but it is Yamaha’s belief 
that total demand will return to around 2017 levels and 
“we are planning our strategies with this demand movement in mind”. 

For instance, the upper-middle class of ASEAN nations is expected to nearly double in number over the next decade. “It is around 2.5 for India and if looking at global markets, it’s about 1.3 times today’s number. This segment is undoubtedly going to be a growth area in the coming future,” observed Kinoshita. 

Yamaha believes that its strength lies in creating new markets for customers who view motorcycles and scooters “not just as useful tools but also as holding value as a means for self-expression and self-actualisation”. This is another “speciality area for us” and the idea is to continue launching new premium segment models that target these customers. 

“To carry this out, we will create new premium 
model segments not just through the products themselves but also through brand marketing as we aim for further market expansion,” said Kinoshita. Another example cited during the presentation was Indonesia, traditionally a Yamaha favourite but has not been in the best of shape in recent times.

Yet, this is a market where the company will spearhead its premium segment strategy even though “we have not fully returned” to the levels of 2018 and 2019. “However, we expect to return to that level in the next three years and the segment driving this return will undoubtedly be Indonesia’s upper-middle class,” reiterated Kinoshita, while driving home the message that the country remained a priority market. 

ASEAN strategy revealed
During the Q&A session, the management said Yamaha would endeavour to outpace competitors in emerging markets across ASEAN by enhancing its brand power through different model brands. “We are preparing to do this with standout model brands such as our MAX Series, which consists of models like the TMAX, XMAX, and NMAX. The second step is to put such line-ups to use and get an early start on engaging even higher income consumer segments,” it elaborated. 

According to the management, customers in ASEAN have long used motorcycles and scooters just as a means of travel but “uses will diversify” going forward. In line with that, Yamaha is “carefully preparing” products that will offer new value to customers. “We will differentiate ourselves through new technologies and our connected models,” it added. 

While pointing out that there is pent-up demand in emerging markets, circumstances differ for each country right from Indonesia to Brazil. “We see emerging markets 
as a whole potentially growing by some 25 percent from here on, but we do not think demand will lead to the level 
of overheating we are seeing in developed markets,” said 
the management.

Asked what Yamaha’s approach to production would be in five to 10 years, the management replied that until now, the company has been engaged in local production for local consumption. However, for the future, the time had come to change “our view to our facilities functioning as a single massive factory catering to the globe”. 

Yet, it was not simply about concentrating production operations into one place but rather to adopt a system that can react and respond as needed with the business continuity plan. Interestingly, spare parts sales in both developed and emerging markets contribute a great deal to Yamaha’s profits. 

Since the pandemic has made it difficult for customers to buy new products, they have been purchasing and using spare parts to maintain and use the models they own already, said the management during the Q&A. It also made clear that cost reductions would continue going forward. 

“Yamaha Motor headquarters has been able to cut business trip expenses by conducting online meetings instead and this has also led to more active communication. We do not intend to return our expenses to previous levels in line with the market recovery,” said the management. 

An interesting part of the Q&A session pertained to the company’s carbon neutral strategy where it said it would create new markets by bringing electrification to a broad range of products. “We consider creating new markets through our product development capabilities to be one of our strengths,” added the management. 

However, while it was easy to focus on electrification as a measure for achieving carbon neutrality, it was more important to first examine what kind of battery is good for which product segment and what kind of batteries are likely to be standardised by each region. “We will move forward with solutions not limited just to electrification but also ones that cater to a wide range of mobility formats,” said the Yamaha management. 

Equally, the technology versus cost equation “is not currently where we can actively replace” internal combustion engines. “We think we will be able to strike the right balance by 2030. We also estimate that the standards, regulations, etc for infrastructure such as charging stations and battery ecosystems will be established around 2030,” elaborated the management. 

Replying to a question on the lessons learned so 
far through Yamaha’s collaboration with Gogoro, it said 
that with swappable battery systems, the key lies in how well can the charging infrastructure be prepared as a cooperative effort. 

If this task is tackled not only by motorcycle manufacturers but also by electricity and energy companies, “we believe there is plenty of potential“ for swappable battery systems to grow in popularity in urban areas. 

“As for how we move to electric models, we will tailor our development of such products to fit the diverse types of use and needs in different regions and customers, and not only through swappable battery systems,” clarified the management. 

By the end of the day, with a host of options such as electrification, hydrogen fuel cells, and synthetic fuels, Yamaha does not think that “narrowing our choices down to a single one is a good strategy” because each has potential. 

“We have a very diverse product portfolio that ranges from ATVs to e-bikes, and for the latter, batteries happened to present the best solution for bicycles. As we also have large-displacement motorcycles, we believe there is potential for applying each technology where it will work best,” signed off the management.  

This feature was first published in Autocar Professional's January 1, 2022 issue.