Yamaha to double its Indian presence

Yamaha has made no secret that India and China are key pillars in its growth strategy over the next two years, which was exhaustively detailed in a new management plan unveiled earlier this year that "calls for the company to get back to basics and to redouble its commitment to product development and a bottom-up approach".

We are already starting to see that policy play out, with Yamaha announcing plans to double the number of its sales outlets in India over the next five years.

In particular, India Yamaha plans to open new showrooms in small towns and rural hubs, where 70 per cent of India's 1.1 billion people live. Yamaha's bigger rival, Hero Honda Motors (which dominates signage at Indian cricket grounds), also has a similar strategy to expand in the countryside.

India, home to Asia's third-biggest economy, is spending more to build roads connecting villages and improve electricity, phone and health care. The infrastructure investments and rising prices for farm produce are boosting rural incomes.

"The next strong demand for motorcycles could only happen in rural and semiurban areas as people in urban centres shift to cars," said Mayur Milak, an automobile industry analyst at Alchemy Share & Stock Brokers Ltd. in Mumbai. "The only issue will be branding, because typically it's word-of-mouth publicity that works and Hero Honda has an advantage in this."

Motorcycle and scooter sales grew 26 per cent in India in the year ending March 31. That equates to a cool 7.3 million units. No wonder Yamaha is keen to annex a bigger slice of the pie, where its market share is currently running at a small 3.5 per cent.