Yamaha to challenge Hero with worlds cheapest bike

Written by feBureau | New Delhi | Updated: Apr 10 2013, 08:11am hrs
In a bid to capture a sizeable share of the 14 million units a year two-wheeler market from bigger rivals Hero MotoCorp, Bajaj Auto and Honda, Yamaha plans to target the mass market commuter bike segment with the worlds cheapest bike by next year. With a price target of around $500 (R28,000), the new bike will be developed at the Yamahas newly set up India R&D arm.

We are developing a new line of bikes in India, which will be the lowest cost model in the world. We will focus on the requirement of the Indian customer, like fuel efficiency, durability and cost-effectiveness. We will also export this model to markets like Africa and Philippines, and even China if there is an opportunity, said Toshikazu Kobayashi, MD, Yamaha Motor R&D India (YMRI).

The new model will target the mass 100-110 cc bike segment that accounts for 47% of all bike sold in the country, and where Heros HF Dawn (R36,600 starting) is the top-seller, followed by the Bajaj Platina and TVS Max 4R. At present, the cheapest bike in Yamahas India range is the Crux (R37,000 approx).

In order to lower costs and speed up model development, Yamaha has set up YMRI as its fourth global R&D centre outside Japan. With operations in Surajpur (UP) and Chennai, YMRIs focus will be to integrate product development with purchasing and manufacturing functions. The retail price of motorcycles is becoming lower and product life cycles are now shorter, so the R&D work in Japan is becoming expensive almost five times more. So we are now looking to reduce total development cost by shifting R&D to India, Kobayashi said.

Yamaha, which currently has a plant in Surajpur with a million unit annual output, is investing R1,500 crore in a second plant in Chennai with an annual output of 1.8 million units. The company expects domestic sales in 2013 to rise 40% to 5 lakh units (7.1 lakh with exports) and a million units (with exports) by 2015.

Yamahas growth has significantly lagged behind its competitors. Today, it is the sixth largest two-wheeler player with a 2.6% market share, where leader Hero has a 43% share, followed by Honda (19%) and Bajaj (18%).