Tuesday, 29 May 2012

Yamaha to Offer World’s Cheapest Bike Priced at ~ Rs. 27,500

According to news reported by Hindustan Times, Yamaha India will develop a motorcycle which will cost as low as $500 (around Rs. 27,500 as per the current conversion rate).  The company plans to export this motorcycle in the African market where demand for cheap motorcycle is growing at a robust pace. Beside this, the company also aims to cater the entry level segment in India by launching the cheapest motorcycle. Currently, the 110 cc Crux is the cheapest offering from Yamaha India which cost Rs. 38,365. Hero Motocorp’s CD-Dawn is the cheapest motorcycle in the India at a price of Rs. 36,300.
Yamaha Low Cost Motorcycle for India and Africa
Hiroyuki Suzuki, chief executive officer and managing director, India Yamaha Motor  said “Our product benchmark right now (on cost) is the YBR 110 and Crux, but we would like to develop a bike in the low-cost segment for markets like Africa. The target is to make a bike that will cost $500 (about Rs. 27,500). I think such a bike will have a lot of demand in Africa as well as in India.”
Why all the two wheeler manufactures focusing Africa?
According to an estimate, there are more than 4 million two wheelers sold in Africa each year. Nigeria accounts lion’s share in the African region with more than 1.5 million units of two wheelers sold each year. The two wheeler market in Africa has grown at around 30% rate and it has still potential to grow at this rate for the next decade. Beside this, the African market is largely under penetrated due to low per capita income. It is not surprising to know that motorcycles are used as a taxi in Africa due to low per capita income.
Africa’s four million plus two wheelers market is largely penetrated by Chinese and Indian manufacturers. Japanese manufacturers have very less presence in this market. Bajaj Auto’s Boxer is the largest selling motorcycle brand in the African region. Bajaj Auto exports 60,000 units of Boxer each month to Africa and it is surprising to know that Boxer entered in the African market only six years back in July 2006.
No doubt, if an Indian motorcycle manufacturer can sell 60,000 units a month why not a Japanese manufacturer. Yamaha sells around 40,000 units of motorcycle (including export) from its India operation. If, it will capture 50% of what Bajaj Auto sells, it will add additional 30,000 units. This is nothing but representing 75% on its current sales in volume terms.
Will it be easy to replicate success of Boxer?
Boxer is much dominant brand in Africa now. In fact, it’s most visible vehicle in the city of Lagos in Nigeria.  It is also surprising to know that Boxer sells on 50% premium compared to Chinese motorcycles and it is growing at the rate of 40% in the African market.  Keeping this in mind Honda Motor Corporation of Japan had purposely developed ACE CB125 ($600 motorcycle) for this market. It was launched in the September month last year. However, it has failed to make any large impact on Boxer’s sales.  Bajaj Auto also enjoys very good distribution channel in Africa which is key to penetrate this market.
Apart from Bajaj Auto, Honda and Chinese manufacturers, Yamaha will have to compete with Hero Motocorp too. Hero Motocorp has very ambitious plan as far as African region is concern. It is also planning to set up an assembly plant in this market. Hence, it will not be easy for Yamaha to get runaway success in the African market.

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