After hitting it off with its ‘Made by women, for women’ brand of Ray scooters a year ago, India Yamaha Motor (IYM) is preparing to expand its scooter portfolio next year. A likely candidate could be a Ray variant targeted at small families, a product that is currently missing in the company’s product basket.
The existing 113cc Ray has been averaging sales of 3,000 units per month. It has been particularly popular in the South where literacy levels of women are among the highest. Its successor, the Ray Z targeted at young men and launched in May this year has drawn customers pan- India and is clocking sales of 9,000-12,000 units every month.
Speaking to Autocar Professional, Roy Kurian, vice-president (sales and marketing), IYM, said that the Ray Z, along with the recently launched Ray Precious edition, is seeing increased footfalls at dealerships. While the Ray Precious is an attempt to pep up sales ahead of the festive season, no further model launches are slated for this calendar year.
Overall, IYM expects the Ray twins to provide a firecracker effect to sales during the festive season and Kurian is optimistic of about a 40 percent growth in sales across the board including the Ray scooters in October and November 2013. He says the Rays could record monthly sales of 20,000 units during this period. Interestingly, despite growing demand, the scooters do not have a waiting period at present.
In July this year, IYM had voluntarily recalled 56,082 Ray scooters after it had detected insufficient strength in the handlebar of some scooters arising out of inadequate welding issues. The recall did not affect the Ray Z. So far about 65-70 percent of the handlebars have been replaced in the recalled scooters in the last three months. The balance replacements are expected to take the same time as IYM is still trying to trace the remaining 35 percent of the customers in the recall.
The Ray is manufactured at the company’s Surajpur facility in Uttar Pradesh and competes with the Honda Activa, TVS Pep, Hero Pleasure and the 125cc Vespa. Kurian says IYM is evaluating export plans for the Ray but is yet to finalise them since scooter markets globally are limited and Indonesia is more of a step-through market. Meanwhile, the company has recently completed the capacity expansion programme at Surajpur that augments capacity from 600,000 units to around 1 million per annum. IYM is optimistic about selling a million units next year from Surajpur.
Scooter sales up
Despite the slowdown, the two-wheeler market has fared better than other segments, thanks mainly to scooters. In August 2013, scooters notched over 21 percent growth at 283,000 units over sales in August 2012, according to SIAM data. In comparison, the total two-wheeler industry saw only 6.68 percent growth in August 2013 at 11,28,598 units, and that too due to a low base effect.
For the five-month April-August 2013-14 period, scooters were the best performers with 14.77 percent growth, while motorcycles and mopeds fell 2.08 percent and 13.34 percent respectively.
On its part, IYM posted an overall growth of 67.4 percent in August 2013 selling 60,996 units (August 2012: 36,432). Of this 42,990 units were sold in the domestic market (August 2012: 27,297), up 57.5 percent. On the export front, the manufacturer sold 18,006 units in August (August 2012: 9,135), up 97 percent.
IYM expects to close calendar year 2013 with sales of 460,000 units compared to 330,000 units in 2012. Clearly, despite the slowdown it is aiming high and targeting a growth of 20 percent. The company, which has a 3.23 percent market share at present in two-wheelers, has a 4.62 percent share in the scooter market. Another segment where it has fared well despite the slowdown is in deluxe motorcycles and its focus in 2014 will continue to be on increasing its share in deluxe bikes and scooters. While the volume segment has been worst hit by the slowdown, deluxe and premium categories have largely escaped unscathed.
In the deluxe segment, Yamaha has been recording sales of 18,000 vehicles a month in its 153cc FZ series including the 153cc Fazer motorcycle. Recently, a special edition was launched in this segment and has seen bookings of 4,000 units in a single month. Kurian expects the FZ series to perform well in the festive season as well, upping its figures to 20,000 units monthly. It is also looking to grow its share in the YZF-R15 Version 2.0 (150cc) motorcycle category.
All eyes on new Chennai plant
Meanwhile, a bhoomipujan has been conducted at IYM’s upcoming third manufacturing facility near Chennai in September. Production will kick off by end-2014 with the first model to roll out being a scooter. The Chennai plant will also be developed as an export hub with proximity to the Chennai and Ennore ports helping spearhead shipments to global markets including a few new markets that are still under finalisation. So far, Yamaha has focused on South Africa, Latin America, Indonesia and the ASEAN where the main consignments include the FZ series bikes, the 106cc Crux motorcycle and some YZF-R1 motorcycles. It currently exports around 20,000-25,000 motorcycles every month.
Interestingly, Yamaha has adopted a top-down approach for growth in India, concentrating on shoring up its presence in A and B towns initially. Dealerships and mini-dealerships are springing up in these urban cities on the 3S (sales, service and spare parts) model. Yamaha hopes to close 2013 calendar year with 1,400 outlets, expanding to 1,600 outlets in 2014. Of this at least 50 percent will be Yamaha Bike Corners; at present, they account for around 450 units.
While other two-wheeler manufacturers are speeding up their growth in the rural markets (C and D towns) where mass commuter bikes are popular, it will take some time for Yamaha to graduate to this next level. Though a low-cost bike is under development in India, it will only reach the markets in about three to four years. Till then, for IYM, its scooter range is expected to play an important role in taking on the competition.