60 MINUTES: TAKEHIKO
HASEGAWA, PRESIDENT OF YAMAHA MOTOR CO.
"We will give
what the masses want"
Fifteen years ago, it was only the third
entrant in the NASCENT 100-CC motorcycles market. And the heady success
that followed its entry seemed to testify its global reputation as the
power-bikes leader. But then, the four-stroke wave came, and Yamaha in
India (in joint venture with the Nandas-promoted Escorts) saw rival Honda
race to the top of the market. Today, Yamaha Escorts has been relegated to
the bottom of the pile, simply because it has little expertise in
four-stroke technology. Yamaha plans to change all that. For starters, it
has increased its stake in the joint venture to 74 per cent. In India last
month to launch a new four-stroke motorbike, Crux, Yamaha Motor
Co.'s President Takehiko Hasegawa spent an hour with BT's Ranju
Sarkar and
Shamni
Pande to
talk about Yamaha's plans. Excerpts:
 Q. In India, Yamaha's marketshare has
taken a beating. We believe the figure is now down to 8 per cent. What do
you think has gone wrong and what do you plan to do about it?
A. Traditionally, two-stroke has been our
area of strength. Ever since April 2000, when the Euro II norms for
vehicular pollution were introduced in India, our market has got affected.
Another problem is that, in terms of price, our mobikes-which currently
are in the 100-CC plus range-tend to get benchmarked against 100-CC models
of other manufacturers. It is a stiff benchmark and strictly speaking not
comparable, since we are talking about two different models.
Do you see Crux (Yamaha Motor Escorts'
new model in India) rectifying that problem?
We asked our product development group in
Japan to design Crux with India in mind. But you have to understand that
Yamaha is basically a two-stroke engineering company, and we have started
work on four-stroke bikes only two years ago. We have to invest in
R&D. Putting a catalytic converter to a two-stroke bike really doesn't
help us because it increases cost by up to 30 per cent.
Why do you think the YBX (125-CC) failed
to click?
There were some problems (gear breakage,
valve bending, and fuel efficiency) initially. Besides, the quality of
fuel in India is not very good. It adversely affected the bike's engine.
But these problems have long been sorted out. Unfortunately, the image
took a setback because of the initial hiccups.
There's a perception that Yamaha has
been slow in introducing new models in India.
That's not true. YBX has been around for
two-and-a-half years and at the end of 1999 we introduced YBX 125, which
was followed by two more models this year.
Compared to other players like Hero
Honda, Bajaj Auto, or even TVS Suzuki, Yamaha has kept a low profile. Do
you plan to increase your spend on advertising?
We will not hesitate to spend if there is a
need for it. But I think spends alone don't help in brand-building. We
plan on a lot on field activities and local events.
There's a lot of activity taking place
in the non-geared and scooterette segments. Does Yamaha have any plans to
enter these segments?
For the time being, we intend to
concentrate on stabilising our motorcycle business in India. We will look
at other segments only after that.
What about the power bike segment?
Yamaha is well-known for its power bikes, although the RX 350 did not do
well in India.
No. We will first concentrate on the 100-cc
segment, simply because that's where the volumes are. Maybe, at a later
stage, we might want to look at that segment. But for now, it will be what
the masses want.
Coming back to Crux, what kind of a
marketshare do you hope to achieve with this model?
By March 2002, we expect the total market
for motorcycles to be at 23 lakh units a year. We hope to have a 15 per
cent share of this market.
Would that entail having to beef up your
dealer network?
No. I think we already have a very large
dealer network of 450. We will not increase this. However, we will invest
in beefing up our manufacturing capacity, since we have to upgrade our
plant to deliver four-stroke vehicles. At the moment, it is geared more
towards the production of two-stroke vehicles. We will be investing about
Rs 50 crore every year till we have achieved our target.
Globally, Honda has been a leader in
motorcycles and Yamaha has been a close second. But we believe your share
has been declining in the past few years. Are the problems related to
products or strategy?
Globally, our marketshare has not
decreased. Yes, in India it is down to 8 per cent. Actually, global
marketshares are unknown because China, which is the biggest two-wheeler
market, has a very different economy and the presence of many local
manufacturers makes the market disorganised. Therefore, it is very
difficult to ascertain the marketshare of any player.
What is your estimate of Yamaha's
marketshare?
I can't say for China, but in Asia and
Brazil, the volume-wise share of Honda is very high. But the point you
must consider is that our products are unique.
How many licences does Yamaha have in
China?
In China, we have two companies for
assembling our motorcycles. That apart, we have technical tie-ups with
three companies and three part joint ventures. Totally, some say, the
market in China is 10 million units a year.
Is there any restructuring exercise that
Yamaha has undertaken to adapt itself to the changing economic environment
of the various countries it operates in?
In India, we have changed the management.
We have taken a majority stake. The newly reconstituted board (with effect
from July, 2000) has eight persons, of which six are from Yamaha Motors
and two from Escorts. The Vice-Chairman will be Rajan Nanda. We have made
a similar change in Thailand, where we have a majority venture.
How has Yamaha's motorcycle business
performed this year vis-à-vis last year and its competitors?
On a consolidated basis for this year
(April-March), we hope to notch up net sales of 880 billion yen and an
ordinary income of 24 billion yen. Compared to last year, our net sales is
nearly the same. But our ordinary income has declined by 20 per cent (it
was 30 billion yen the previous year).
What is the outlook for motorcycle sales
globally, and what markets will fuel the demand?
As a total market, the industry will grow
from 18 million units last year to 20 million units by December 2000. And,
certainly, we can see the trend line in India going up. In terms of
acceptance, the motorcycle markets differ from one another. For example,
in countries like Japan and the United States, motorcycles are seen as
items of leisure. But in countries like India and Africa, motorcycles are
looked upon as a means of transportation.
A final question, Mr Hasegawa. What's
the Kando philosophy that Yamaha follows? How does it translate into a
business philosophy?
Even though the circumstances have changed,
we look for reality. We look at bringing forth products that surpass
customer expectations. We go through a very rigorous cycle of: plan, do,
check, and then act. We follow this cycle very religiously. That's what
the Kando philosophy is about.
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