Honda, Yamaha announce tie-up for small scooters

Scope of agreement between Honda & Yamaha only limited to small scooters

By: | Updated: October 5, 2016 5:26 PM
Scope of agreement between Honda & Yamaha only limited to small scooters (Reuters) Scope of agreement between Honda & Yamaha only limited to small scooters (Reuters)

In a surprising turn of events, Honda Motor Co and Yamaha Motor Co have announced a tie-up to develop small scooters for the Japanese market. The announcement comes as a surprise after a strong rivalry between the brands, that dates back to decades. The world's largest two-wheeler maker, Honda, will manufacture Yamaha's 50 cc scooters at its plant in Southern Japan by the end of 2018.

The tie-up has been planned in wake of the shrinking two-wheeler market in Japan, as reported by Reuters. The collaboration will allow both companies to keep development costs in check as volumes decline and emission regulations continue to push the engineering costs up. The scope of this agreement however is limited to development and manufacturing of small scooters only. Both companies will continue to market and sell their scooters individually.

The reason for Honda taking up the responsibility of manufacturing was made in favour of lower costs arising out of the company's production in Japan. Yamaha on the other hand would have to get the manufacturing done in Taiwan and the scooters would then have to be shipped back to Japan, adding to cost. In addition, both companies will also look at working together on development of electric scooters, which are expected to see an increase in demand in the coming years. However, both companies have agreed to consider such an agreement and haven't drawn the product outlines of a specific electric scooter yet.

From an Indian perspective, there isn't much to explore in this development as the management of both companies have stated that the scope of this tie-up is only limited to Japan. In addition, the kind of vehicles covered under the agreement do not make a logical fit for the Indian market as 50 cc scooters or small electric scooters would find it hard to get buyers here.