"Nepal is for fuel-economy bikes"
Tadayoshi Suganuma, Managing Director, Yamaha Motor Escorts
Ltd.
Of India, was recently in Kathmandu to formally launch here his company's
newest model bike, Crux, of which 200 units were already sold within first
15 days of them being available in Nepali market, i.e. even before the
formal launching. Suganuma explains the reasons and how a small market
like Nepal holds importance for this international giant in two wheelers.
Excerpts of an extensive interview:
hat significant trends do your see in two-wheelers,
more particularly in motorcycles, market in South Asia?
 Indian
market is the second biggest in the world for two wheelers. Though the
total two-wheeler market in India has not increased over the last year,
and it is shrinking in scooter and two-stroke bike segment, it is increasing
by 20% in some markets and 25% in some other markets in motorcycle category.
Now the customers prefer fuel-economy bikes, because the fuel is very
expensive in this part of world. About 80% of total motorcycles types
available here are fuel-economy category. Recently, competition has been
heating up. All the motorcycle manufacturers like Hero Honda, Kawasaki
Bajaj, TVS Suzuki and Yamaha are introducing new models. But not all of
them are fuel-economy type. There are some image models like CBZ, Suzuki
Fiero, and Kawasaki's Eliminator. Though their volume is very low, companies
are trying to create the brand image.
In Bangladesh also, customers want fuel-economy models
and prefer two-stroke bikes. But recently this trend is changing. Now
they are assembling bikes in their own country. So, each manufacturer
has assembling-lines there. Market size is not so big, but the industry
is growing.
In Sri Lanka, they used to have only secondhand bikes
imported mainly from Japan. Now Hero Honda, Bajaj and Yamaha have entered
the market. Still there is a trend of importing second-hand bikes.
Pakistan market also is not so big. They have both two
and four-stroke bikes. They are very much price-conscious. The volume
again is not big enough. They don't make bikes themselves. They don't
have good relation with India. But if Pakistani government allows to import
bikes from India it would be very nice.
Nepal is very different to other markets. There are so
many types of models. Chinese, Taiwanese as well as American motorbikes
are imported to Nepal. There are not only fuel-economy models but all
the different models are available here.
Where does Yamaha stand in this race at present?
Even after Nepali government banned import of two-stroke
bikes the market size of two-stroke bikes is growing. In Nepal we (Yamaha)
are close to number two with Hero Honda as number one. Though two or three
years earlier Yamaha was number one, recently Honda introduced very cheap
but attractive models in India, so Yamahas' position came to be the second.
In Bangladesh, sometimes Yamaha is number one and sometimes Honda. In
Pakistan also Yamaha is number one and Honda second. In Sri Lanka Yamaha
just started its business.
Would you mind sharing with us some major strategies of Yamaha
in this highly competitive market?
 Volumewise,
Indian market is the biggest among South Asian countries. But Yamaha's
share in India is not so big. We started joint venture in India in 1996
only. In the beginning, we had no good relation with our partners. In
1995, that is before we started joint venture, our position in India was
number one. At that time RX 100 was popular in India as well as in Nepal.
After 1996, India introduced exhaust emission norms and we could not sell
RX 100. So we started to produce RX 135 as an improved version. But customers
were not so satisfied with that model. Therefore, we introduced four-stroke
model in 125 cc. At first stage we had some problems as our company was
not so familiar with either four-stroke or small motorcycles. Therefore,
Yamaha's brand image went down. But now our company has changed the investment
structure. Last year (June 2000) Yamaha increased its equity share from
50% to 74%. Now the management is fully looked after by us and everything
is going well. Our new model bikes are also doing well. In December 2000
we introduced another model, Crux. It is a good model-both in performance
and fuel consumption- and its look is also good. It will increase our
volume in Indian market.
We have also introduced bikes with the catalytic converter.
Because many customers still like them due to their performance, we want
to keep two-stroke brand-image, at the same time creating a good image
in four-stroke category as well. Rx 100 and RXZ are two-stroke bikes which
have catalytic converter. In four-stroke, we have YBX, YD 125 and recently
introduced Crux. This year our market share is going to increase.
How well are these products performing in the market?
Young customer prefer YBX whereas normal customers like
Crux, which is far better than Kawasaki and Hero Honda in many respects.
It is durable and fuel mileage of Crux is more than 65 Km (even 70 km)
per liter. Recently the Overdrive magazine of India declared YBX to be
number one bike in its category in terms of performance. YD 125 is second
and Crux also is in very good position. In regions like Gujarat we are
doing well. Customers are very happy with Crux as it is fuel-economy bike.
It is a good sign to increase the volume of our bikes. Crux will be introduced
in other countries also like Sri Lanka and Bangladesh, though cannot export
it to Pakistan.
May be after one month,Yamaha Motor will increase its
equity from 74% to 100% in India. We regard Indian and the Asian markets
to be very important. We are creating R&D zones. Though small at present,
it will be made bigger and will be developed to nice models in each country.
Though the basic development of the motorcycles is done by Yamaha Motors
headquarter, the Company has fully understood our market and requirements.
We can expect more support from our headquarters. Financially also we
will get more support for this area. After few months ,we will introduce
more nice model bikes in fuel-economy category for big markets and more
fashionable ones for city area.
What difference do you find among the customers
of South Asian countries and other developed countries like Japan or USA?
In the countries like Japan, USA or Europe there are
more sporty and joyriding bikes whereas in South Asia they are more like
utility vehicles. Here people don't need big motorcycles- 100 cc and 125
cc bikes are more popular here. They may go for 200 cc bikes at the maximum.
Even the fashionable bikes here have fuel economy types.
Nepali market is getting ever increasing number
of motorcycles also from China as from India. And the Chinese bikes too
boast of technical collaboration with major global names in motorcycles.
Where does Yamaha from India stand in Nepali market in this competition
from China?
Yes, Chinese bikes are available in most of the south
Asian countries. They are very cheap, but I don't know how they produce
such cheap bikes. One reason may be that they just copy from the Japanese
bikes. Their labour cost is automatically very low. At the first stage,
their quality was not good, but now they have improved a little. Still,
their quality is far lower than that of the Japanese collaborated bikes.
They (Chinese) never introduce new models. They just copy. But some customers
look at the price only. Still that does not disturb our business much.
What is the importance of Nepal's so small a market
for Yamaha?
Nepal sells, including all brands, 18000 bikes a year.
In comparison with India, per capita sales of bikes in Nepal is much higher.
Therefore, Nepali market is very much important for us. One more good
point about Nepal is that Nepal can import any bike from any country.
Therefore, many varieties of bikes are sold in Nepal. Competition is very
important here.
One point I would like to mention here is that Nepali
government has strictly followed exhaust emission norms. That is good.
Even it is alright that they have banned import of two-stroke bikes. Now
we also hear that the government is soon to remove two-stroke bikes from
the streets in Kathmandu. But it is not good, because customers are enjoying
two-stroke bikes and these bikes are in normal conditions. We have our
social obligations towards our customers and it is very important. If
the government suddenly removes two-stroke bikes, how do we manage our
business? Therefore, please think about our existing customers. Over the
years, the volume of the two-stroke bikes will be reducing. All our new
models now on will be four-strokes only. But please keep our customers.
Let them enjoy what they already have as long as these machines perform
satisfactorily.
Does Yamaha have some specific plans for Nepali
market that are to be undertaken in the near future?
In Nepal our importer is very hard worker
and his marketing activities are very good ones. Therefore, we have given
him very nice model bikes like YBX and Crux. We will be making more nice
motorbikes in different ranges and will be sending them to Nepal. One
of our strategy is to introduce new models continuously. We will continuously
support our importer as well as our customers.
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