The Samurai’s vengeance

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Yamaha, Suzuki & Honda are upping their ante in India

The Yamaha RX100 was the product to own, way back in the 1980s. Back then if you were a young, hip and adrenaline pumping youngster, the Yamaha was an almost prerequisite accoutrement. Japanese major Suzuki (with high performance bikes) was also on a roll in India at one time, in collaboration with TVS. But that was then. Enter huge hikes in fuel prices, Euro norms and indigenous manufacturers, willing and able competitors in fuel efficient products, stole the thunder from under the Jap majors’ feet. Performance-oriented products were fast forgotten. Hero Honda catapulted itself to the numero uno position on the back of its super successful crop of fuel efficient bikes (Splendor), while Bajaj brought the volumes (piggybacking the CT100). Yamaha, Honda, Suzuki tried to fight back with their version of fuel efficient bikes but could not match them. A look at the sales between April and September 2007-08 for independent foreign bike makers (Yamaha, Suzuki and Honda – now predominantly selling fuel efficient bikes) will tell the rest – a combined 518,139 units, 59% of the total units sold by just Bajaj in the same period!

With the successful re-bifurcation of Bajaj into the performance segment and the success of Hero Honda’s premium offering CBZ Xtream, Japanese bike makers understood that the game is not over and perceptions can be changed. If Hero Honda could sell premium bikes being perceived as a fuel efficient bike maker, what’s stopping the Japanese majors to go in for a makeover?

The Samurai’s have found a simple answer in their respective portfolio restrictions; Honda could not enter India with an economy product because of its collaboration with the Hero Group; while both Suzuki & Yamaha on their part lacked effective small capacity products in their line-up. Ironically the recent decline in sales of established players like Bajaj and TVS is also showing the way! According to Autocar India’s Rishad Cooper “Sales of both TVS & Bajaj declined because they did not have a good product between the 100-150cc.” This actually means that there is a lacuna between the 100 and the 150cc segments prevailing in the market and the Japanese players are trying to cash in on this. Honda with its Shine 125 and Yamaha with its Gladiator 125 are expecting a first mover advantage in this expected next high potential segment.

Though TVS and Bajaj are also sprucing up their arsenal in this segment, the Japanese have a chance to brand their products more effectively. For an executive segment (125cc) consumer, fuel efficiency is top priority, but style and performance is also much sought after. Yamaha and Suzuki’s performance bike image can help in integrating this perception to their new ‘fun’ products.

Speaking on future Yamaha (which is investing Rs.1000 crores in the country) offerings, Ishikawa, Yamaha India’s CEO, told 4Ps B&M, “the new product will be affordable and attract younger people. It will be uniquely designed for bikers and not commuters.” With the prospective advent of super bikes from these three Japanese hot shots, the market situation is bound to alter, more so because indigenous manufacturers simply cannot compete in the upper niches of the two-wheeler segment. Yamaha expects to gain a 19% market share by 2012 while both Honda and Suzuki have similar designs! All we can say for now is that our desi stars viz. Hero Honda, TVS and Bajaj better watch. The iron is hot and Japanese Samurai’s are all set to strike back....

Edit bureau: Karan Mehrishi

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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