Yamaha to Double Showrooms in India in 5 Years to Tap Rising Rural Demand
A man drives a Yamaha Motor Co. YZF-R15 motorcycle on a road in New Delhi. Yamaha plans to double the number of its sales outlets in India in the next five years. Photographer: Prashanth Vishwanathan/Bloomberg
Koji Arai of India Yamaha Motor
Pankaj Nangia/Bloomberg
Koji Arai, director and chief sales officer of India Yamaha Motor, speaking during an interview in Surajpur, on Thursday.
Koji Arai, director and chief sales officer of India Yamaha Motor, speaking during an interview in Surajpur, on Thursday. Photographer: Pankaj Nangia/Bloomberg
Yamaha Motor Co., the world’s second-biggest motorcycle maker, plans to double the number of its sales outlets in India in the next five years to tap demand in villages as economic growth boosts incomes.
India Yamaha Motor Pvt. may increase showrooms to 2,000, mostly in small towns and rural hubs, Koji Arai, director and chief sales officer, said yesterday in an interview in Surajpur, near New Delhi.
The country, 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. Yamaha is following Hero Honda Motors Ltd., India’s largest motorcycle maker, to expand in the countryside, where 70 percent of the nation’s more than 1.1 billion people live.
“The next strong demand for motorcycles could only happen in rural and semi-urban areas as people in urban centers 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 is word-of-mouth publicity that works and Hero Honda has an advantage in this.”
Rising Sales
Industrywide motorcycle sales advanced 26 percent to 7.3 million units in the year ended March 31, according to the Society of Indian Automobile Manufacturers. Yamaha sold 223,305 units locally in the period, according to the group. Hero Honda, which sold 58 percent of the total in the period, gets about 40 percent of its sales from villages, the company said in March.
About 10 percent of the people living in villages in India own a motorcycle, compared with the national average of 18 percent, local brokerage Batlivala & Karani Securities Ltd. said in a report in February.
Yamaha fell 0.5 percent to 1,284 yen in Tokyo. The shares have gained 10 percent this year.
India Yamaha Motor, which is 70 percent owned by Iwata City, Japan-based Yamaha, targets an increase in sales from small towns and rural areas to as much as 30 percent of the total in the next five years, from about 15 percent now, Arai said, without saying how many units the company will sell.
“In order to do well, we need to increase the breadth and spread of our network,” said Pankaj Dubey, national business head at India Yamaha. “First you have to make motorcycles available and only then sales can happen.”
Retail Network
The company is refurbishing some of the existing outlets in small towns and rural hubs and adding new ones called Yamaha Bike Corners, organizing free motorcycle service camps and test rides, Dubey said.
“Word of mouth is very important in rural India,” said Arai. “So we are taking good care of our existing customers.”
India Yamaha Motor, which can produce 600,000 motorcycles a year, is considering selling scooters in India, Arai said, declining to provide details.
The convenience of driving scooters that shift gears automatically is attracting more women and will help growth of the segment, Arai said.
Sales of scooters rose 27 percent to 1.46 million units in the year ended March 31, according to the industry group.
To contact the reporter on the story: Subramaniam Sharma in New Delhi at ssharma@bloomberg.net;
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