New Delhi: Arun Ambat refuses to give up his 20-year-old Yamaha motorbike. He won’t even trade that model for a newer marque.
“Nobody used to make fun bikes like Yamaha did,” says Ambat, who runs a business. “Now they make wimpy bikes.”
Ambat is right, says Tomotaka Ishikawa, managing director of Yamaha Motor India Pvt. Ltd. “That’s us now,’’ says Ishikawa, who was brought in last year to win back customers like the 33–year-old Ambat. Somewhere along the way, “we killed our image and our heritage. It was a kind of suicide.”
To bring Yamaha back from the brink in India, the Japanese maker has turned to the 57-year-old Ishikawa, who is already known in the company as somewhat of a turnaround specialist. His claim to fame: turning around ailing Yamaha in neighbouring Thailand, using rock stars and concerts to win back his target audience. In India, Yamaha’s brand ambassador is actor John Abraham, who is also a bike lover.
But hiring stars isn’t all that Ishikawa is doing. “Have to clear internal things first… everything from manufacturing to marketing,” he says.
India’s seven-million-a-year bike market is dominated by Hero Honda Motors and Bajaj Auto, who collectively produce eight out of every 10 bikes sold in the country. Meanwhile, demand is set to grow at more than 15% in the next five years as a strong economy creates more jobs and boosts income.
Yamaha first entered India in 1985 along with partners Escorts Ltd, the maker of tractors. In its 15-year partnership, Yamaha sold 2.5 million bikes, getting 7.2% of the market share. In doing so, it captured the youth market with bikes that had a sporty look and feel.
In 2000, trying to compete with the more fuel-efficient bikes in the market, Yamaha also started to make low-end motorcyles. “We followed Hero Honda and others, and got caught up in the volume game,” says Ishikawa. “We developed models in which I don’t see the Yamahya genes.”
In five years, its market share fell from 8.4% to 3.6% in 2005-06 Its newer models such as the Libero and Crux, didn’t have quite the same quality as the popular RX100.
More troubles followed. In 2001, Yamaha fell out with Escorts. In the six years since then, Yamaha has had it rough. Losses mounted at the company, running into almost Rs1,000 crore, according to company sources. And dealers, tired of brands that were slow-moving, started pulling out. Even in the last four months, 25 of its 350-odd dealers have walked out. Worse, almost a third of Yamaha’s 300 dealers also represent rival larger Honda. “We are getting tired of waiting for them to do things,” says a dealer
But “India has too much growth potential for Yamaha to write off,” said Christopher Richter, an analyst with CLSA Asia-Pacific who tracks the world’s second-largest two-wheeler maker from Tokyo.
Ishikawa is going back to the drawing board and ramping up to introduce a slew of bikes in 2008, that will be more akin to the sporty, robust image that Yamaha lost. He says he is willing to sacrifice the Crux brand, which accounts for half of Yamaha’s domestic sales, and replace it with a better model. “We have to develop our own strategy which will make the brand stand out,” he says.
Armed with at least $350 million from the parent company, Yamaha is streamlining manufacturing and making the plant more efficient. While it hasn’t resulted in job cuts, it has meant reassigning work and improving productivity by minimizing the steps to each process. “From the Escorts way to the Yamaha way, we have to change the way of conducting business,” says Ishikawa.
The results are showing. After three years of declining sales, volumes increased 17.3% to 1,79,922 units in April-December 2006.
Hero Honda and Bajaj are introducing as many as eight models each year. With demand projected to cross 10 million in 2012, according to the National Council for Applied and Economic Research, two-wheeler makers are investing $1 billion to ramp up capacity. “Once the brand image is recovered, market share will follow,” says T Maeda, director of sales and marketing in Yamaha India.
Reinforcing the determination is a framed caricature of Ishikawa on the office wall, which reads “Tommy, Screw-It-Do-it, Ishikawa.” “That’s my business style,” says Ishikawa.