Yukimine Tsuji, India Yamaha Motor's new Chief Executive Officer
In a freewheeling conversation, India Yamaha Motor’s new Chief Executive Officer reveals the strategy behind the resurgent bike manufacturer.
Congratulations on the FZ-16 winning the Autocar India Bike of the Year 2009 award. What are the reasons for Yamaha’s resurgence?
Yamaha India has truly made a comeback and that too with a punch. This is evident by both the consumer and vendor response. Two years ago we decided it was time to taste success and resurge as a consumer-driven brand. While on the one hand we had bikes catering to the basic entry-level segment, there was a need to intensify its presence in the performance segment as well. With the 1670cc MT01 and 998cc YZF-R1, we made a new beginning. Then we showed real strength of character with the all-new 153cc FZ-16 and the 150cc YZF-R15. These two motorcycles have helped re-establish ourselves as an exclusive and a trusted brand by touching customer hearts. Over 40,000 units of these two models were sold across India and the company grew by 16 percent between April and November in 2008. We certainly wish to keep up this momentum. The primary focus now is to grow Yamaha dealerships. At present we have a countrywide network of about 430 dealers and by the end of 2009 we will add 100 more dealers. The next step will be to roll out more bikes but that will take at least two years.
Will the new bikes be in the entry-level segment? Are you also looking at entering the 250cc and above segment in India?
At this point of time, it is difficult to say what kind of bikes will be rolled out in India. We are looking at all possibilities. It is certain that our future products will unleash the technological superiority of Yamaha. Future Yamaha bikes will have even more punch in them. We intend to cater to a wide segment of consumers. Our focus will be on both the entry level and beyond.
What about the niche bike market?
There are no plans to import any more bikes at the moment.
What is your sales target for 2009?
At the start of 2008 we had a market share of 2.8 percent. After the technological upgradation, introduction of new variants and increase in dealership presence, we have successfully captured 5.8 percent of the market. Now the aim is to tap at least 10-15 percent of the market share by 2011. There is a huge market for bikes in India and it is set to grow. There might be some glitches but it will grow. It is difficult to say what kind of sales we will tap in the next few months. Going by our 2007-08 sales figure of 120,000 bikes, we aim to tap at least 140,000 units.
What is your strategy to capture more market share?
Yamaha has made considerable investment in 2008. Close to Rs 800 crore has been pumped in to restructure the Indian operation by 2010. Going by our current run, we should be able to break even by 2010. And to further capture market share, we are relying on many factors. For example, as a part of our strategy, we are replacing our 40-year-old facility at Surajpur in Uttar Pradesh with a brand-new one. We are also upgrading the facility in Faridabad which produces engines and machining and casting components.
What is the level of localisation you have managed to achieve?
We spent two years to develop these two new models (FZ-16 and R15). At the time we had around 170 vendors but for these models we had to desperately scout for vendors to introduce Yamaha’s global quality standards. However, only 100 vendors were able to meet our requirements and they were shortlisted up for this assignment. So far we have had no problems with them and they have delivered very good quality. At present, we have achieved 95 percent localisation of these motorcycle models which are made in India. Only a few small parts which the Indian suppliers cannot make are being imported from South East Asia and some from Japan.Over the past two years we compared Indian prices with China, Japan and other South East Asian countries. And India turned out to be the most competitive. As the import duty in India is high, it makes sense to make the parts here as well.However, we are now going to localise the remaining five percent parts as well, which include bolts, nuts and washers but they need special expertise and are required in large volumes. We are hopeful that with increasing vendor commitment we will be able to achieve 100 percent localisation within a year.
What is your opinion about Indian suppliers?
Before being appointed CEO, I was the manufacturing head at India Yamaha Motor. We have always been conveying our intention to our vendors since the past two years. There is an interesting story behind this turnaround. Two years ago when we first approached them, they refused to believe in our proposition. For them it was quite a surprise that Yamaha was planning to launch two technologically advanced models at the same time. We traveled all over the country to convince a large number of vendors that this was true and that Yamaha was changing its India gameplan. The truth is that we could not have blamed them. In the past decade, we did not have such advanced models in India. This time around we convinced them that we meant business and that Yamaha was going to introduce an aggressive and technologically advanced product portfolio. After a year when we showed them the FZ-16 and R15, they changed their opinion about Yamaha and wholeheartedly agreed to work with us. Today, the vendors are extremely cooperative and are ready to meet any kind of requirement and challenge.
Do you plan to expand capacity?
Our capacity in 2008 stood at 300,000 units per annum. We intend to expand this capacity to 400,000 units by end of this year. This will be achieved by the opening of our new facility at Surajpur in April 2009.
Like other automakers, are you using engineering plastics to replace metals in some areas?
Nothing has changed for Yamaha. The Indian market being a very important market for us, the support from Japan has ensured that nothing changes. But we have used such kind of engineering to reduce the price and weight in Japan. Going forward we intend to educate Indian vendors on this front.
The importance of India as a strong export base for auto parts suppliers is increasing, says Anil Kumar M R, President a...
In an exclusive interview, Radha Krishnan, President and Founder, Detroit Engineered Products (DEP) talks about how the ...
Paul Farrell, the Executive Vice President and Chief Strategy Officer of component supplier BorgWarner tells Autocar Pro...