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Yamaha makes a comeback
Published in Jul-Aug 2015
By Syed Wajeeh-ul-Hasan Naqvi
Will Yamaha’s latest motorbike, the YBR-125, up the industry’s game?
The fact that the parts from a motorbike made in the 1980s can still fit perfectly on a 2015 model bike goes to show how stagnant Pakistan’s motorbike industry has been in terms of innovation. However, the recent wave of advancements to sweep across the automobile industry have finally started to seep into the motorcycle industry, and almost six years after exiting the market, Yamaha was back in April this year with the launch of the YBR-125, an advanced bike with a sporty look.
Yamaha first came to Pakistan in the 1970s via a joint venture with the Dawood Group (known as DYL) and for decades remained the second largest player in the motorbike segment, trailing just behind Honda. However, by the year 2000, DYL’s market share started declining sharply, partially due to the introduction of low cost and comparatively advanced Chinese bikes and partially because of lack of innovation in DYL’s own products.
Explaining the reasons behind DYL’s decline and Yamaha’s recent direct entry in Pakistan, Yasushi Ito, MD, Yamaha Pakistan says that “from 2000 onwards, Pakistan’s motorcycle industry started to see reasonable growth, which then became quite rapid by 2008 with the introduction of low cost Chinese bikes. Yamaha had made a recommendation that the Dawood Group introduce our new models and expand production capacity. However, their perceptions were different and the discussions bore no fruit. We were already considering moving formally to Pakistan, so we thought it was time to part with the Dawood Group and set up our own manufacturing facility to capture the rapidly growing market in Pakistan.”
However, entering the Pakistani market proved to be a major challenge for Yamaha, largely due to the hefty import duties imposed on completely built up (CBU) motorbikes and on parts by the government.
Ito elaborates: “We had to import all the parts, which meant we had to pay a 40% import duty on each and every part of our bikes. With such a duty structure, it was not possible to compete in terms of prices, so in 2008 we started negotiating for new-entrant benefits with the government and made our case on the basis that we would invest in local training, introduce advanced technologies and safety standards and add to Pakistan’s exports in terms of bikes. Finally, the current cabinet approved our appeal on the condition that we started with 15% localisation and a commitment to add another 15% every year.”
Convincing the government was only part of the challenge and for Yamaha the real deal is to convince people to buy a high priced and a high-cc sports-bike.
The 70cc bike category accounts for 80% of the market share in Pakistan and the 100+cc for a mere 15% share – Honda and Suzuki are the major players and Rs 102,000 to 120,000 is the average price in this category. This puts Yamaha YBR-125’s (a 125cc bike) price tag of Rs 129,400 at the higher end. Nevertheless, Yasushi is confident that YBR’s sporty design and advanced features (self-ignition, EURO II OHV engine technology and five speed transmission) will be enough to attract customers to a heavier and more expensive motorbike. He also believes that being in the 125cc category gives Yamaha an edge over the competition.
“The competition in terms of prices is fierce in the 70cc category and we would not have been able to compete there as a new entrant. So we decided to go for the 100+cc category, which lacks innovation and which although a small category, is growing at a rate of 15% every year."
— Yasushi Ito, MD, Yamaha Pakistan
"Moreover, the younger generation, which is our target market, is well exposed to international standards in bikes and there is a high demand for advanced and heavier bikes like the YBR-125,” Ito ads.
To service this demand, Yamaha has planned a production map that starts from 40,000 units in the first year and will reach the 150,000 mark within four years, a figure which could put a major dent in the market shares of local manufacturers, as well as local exporters, given that Yamaha is set on targeting international markets like Afghanistan, Africa, the Middle East and Latin America. To achieve their sales mark in this category locally, Yamaha has established a large sales and service network consisting of 637 dealers, sales, service and spare parts centres.
However, all those people who were starry eyed about Yamaha’s initial ad campaign, which featured everything from off-road buggies, speed boats, scooties, motorcycles, superbikes, electric generators, to jet-skis (thereby hinting that Yamaha would bring its full product line up to Pakistan) will be slightly disappointed.
Yamaha's launch TVC.
“The initial ad campaign was to announce the launch of Yamaha in Pakistan and show-off Yamaha’s capabilities in terms of technology,” says Owais Hamid Khan, CEO, Ideas Workshop, Yamaha’s creative agency.
As to whether the objective of the campaign was to change perceptions in Pakistan, given that Yamaha bikes under the DYL mark had earned the reputation of being ‘doodh-walas’ bikes because they were very popular among milkmen, Khan replies in the negative.
“Although our current ad campaigns are targeted at younger and aware audiences, we do not plan to change the overall image. Yamaha as a company owns its customers. The bike which was popular with the milk-sellers was a very sturdy model that said a lot about the quality of Yamaha’s bikes.”
In Khan’s opinion, the YBR-125 is an innovative product that will attract attention from buyers and translate into major sales and therefore marketing will not be too much of a challenge.
Some motorbike dealers, however, remain sceptical. According to one dealer on McLeod Road in Lahore, “Motorbikes below the 150cc category are still not a young boy’s toy in Pakistan. These bikes are largely a mode of transportation for middle class families."
"YBR-125’s sporty design, especially its seat does not quite fit the needs of a family and may not appeal to them. Moreover, the price difference between Yamaha and Honda might not seem a lot, but it is a major consideration for people who earn Rs 35,000 a month.”
Another dealer in the same area was more positive. “Young people constitute a major chunk of our population and the middle class is also growing; this means that more young people will have money to buy their own bike. The product might not appeal to families, but it caters very well to the needs of young people who are more interested in performance and looks rather than practicality. Then there are young families who own cars but who also use bikes as a secondary mode of transport for their daily chores to avoid getting stuck in the traffic. Such families will also be a major market for YBR-125, as they want a mix of good looks and practicality.”
What is clear, however is that Yamaha’s entry in Pakistan will not only up the game in the motorcycle industry and potentially do away with the stagnancy that has been prevalent for years, it will give buyers multiple choices to enjoy the benefits of the technical innovations the rest of the world has been long enjoying.
Published in Jul-Aug 2015
By Syed Wajeeh-ul-Hasan Naqvi
Will Yamaha’s latest motorbike, the YBR-125, up the industry’s game?
The fact that the parts from a motorbike made in the 1980s can still fit perfectly on a 2015 model bike goes to show how stagnant Pakistan’s motorbike industry has been in terms of innovation. However, the recent wave of advancements to sweep across the automobile industry have finally started to seep into the motorcycle industry, and almost six years after exiting the market, Yamaha was back in April this year with the launch of the YBR-125, an advanced bike with a sporty look.
Yamaha first came to Pakistan in the 1970s via a joint venture with the Dawood Group (known as DYL) and for decades remained the second largest player in the motorbike segment, trailing just behind Honda. However, by the year 2000, DYL’s market share started declining sharply, partially due to the introduction of low cost and comparatively advanced Chinese bikes and partially because of lack of innovation in DYL’s own products.
Explaining the reasons behind DYL’s decline and Yamaha’s recent direct entry in Pakistan, Yasushi Ito, MD, Yamaha Pakistan says that “from 2000 onwards, Pakistan’s motorcycle industry started to see reasonable growth, which then became quite rapid by 2008 with the introduction of low cost Chinese bikes. Yamaha had made a recommendation that the Dawood Group introduce our new models and expand production capacity. However, their perceptions were different and the discussions bore no fruit. We were already considering moving formally to Pakistan, so we thought it was time to part with the Dawood Group and set up our own manufacturing facility to capture the rapidly growing market in Pakistan.”
However, entering the Pakistani market proved to be a major challenge for Yamaha, largely due to the hefty import duties imposed on completely built up (CBU) motorbikes and on parts by the government.
Ito elaborates: “We had to import all the parts, which meant we had to pay a 40% import duty on each and every part of our bikes. With such a duty structure, it was not possible to compete in terms of prices, so in 2008 we started negotiating for new-entrant benefits with the government and made our case on the basis that we would invest in local training, introduce advanced technologies and safety standards and add to Pakistan’s exports in terms of bikes. Finally, the current cabinet approved our appeal on the condition that we started with 15% localisation and a commitment to add another 15% every year.”
Convincing the government was only part of the challenge and for Yamaha the real deal is to convince people to buy a high priced and a high-cc sports-bike.
The 70cc bike category accounts for 80% of the market share in Pakistan and the 100+cc for a mere 15% share – Honda and Suzuki are the major players and Rs 102,000 to 120,000 is the average price in this category. This puts Yamaha YBR-125’s (a 125cc bike) price tag of Rs 129,400 at the higher end. Nevertheless, Yasushi is confident that YBR’s sporty design and advanced features (self-ignition, EURO II OHV engine technology and five speed transmission) will be enough to attract customers to a heavier and more expensive motorbike. He also believes that being in the 125cc category gives Yamaha an edge over the competition.
“The competition in terms of prices is fierce in the 70cc category and we would not have been able to compete there as a new entrant. So we decided to go for the 100+cc category, which lacks innovation and which although a small category, is growing at a rate of 15% every year."
— Yasushi Ito, MD, Yamaha Pakistan
"Moreover, the younger generation, which is our target market, is well exposed to international standards in bikes and there is a high demand for advanced and heavier bikes like the YBR-125,” Ito ads.
To service this demand, Yamaha has planned a production map that starts from 40,000 units in the first year and will reach the 150,000 mark within four years, a figure which could put a major dent in the market shares of local manufacturers, as well as local exporters, given that Yamaha is set on targeting international markets like Afghanistan, Africa, the Middle East and Latin America. To achieve their sales mark in this category locally, Yamaha has established a large sales and service network consisting of 637 dealers, sales, service and spare parts centres.
However, all those people who were starry eyed about Yamaha’s initial ad campaign, which featured everything from off-road buggies, speed boats, scooties, motorcycles, superbikes, electric generators, to jet-skis (thereby hinting that Yamaha would bring its full product line up to Pakistan) will be slightly disappointed.
Yamaha's launch TVC.
“The initial ad campaign was to announce the launch of Yamaha in Pakistan and show-off Yamaha’s capabilities in terms of technology,” says Owais Hamid Khan, CEO, Ideas Workshop, Yamaha’s creative agency.
As to whether the objective of the campaign was to change perceptions in Pakistan, given that Yamaha bikes under the DYL mark had earned the reputation of being ‘doodh-walas’ bikes because they were very popular among milkmen, Khan replies in the negative.
“Although our current ad campaigns are targeted at younger and aware audiences, we do not plan to change the overall image. Yamaha as a company owns its customers. The bike which was popular with the milk-sellers was a very sturdy model that said a lot about the quality of Yamaha’s bikes.”
In Khan’s opinion, the YBR-125 is an innovative product that will attract attention from buyers and translate into major sales and therefore marketing will not be too much of a challenge.
Some motorbike dealers, however, remain sceptical. According to one dealer on McLeod Road in Lahore, “Motorbikes below the 150cc category are still not a young boy’s toy in Pakistan. These bikes are largely a mode of transportation for middle class families."
"YBR-125’s sporty design, especially its seat does not quite fit the needs of a family and may not appeal to them. Moreover, the price difference between Yamaha and Honda might not seem a lot, but it is a major consideration for people who earn Rs 35,000 a month.”
Another dealer in the same area was more positive. “Young people constitute a major chunk of our population and the middle class is also growing; this means that more young people will have money to buy their own bike. The product might not appeal to families, but it caters very well to the needs of young people who are more interested in performance and looks rather than practicality. Then there are young families who own cars but who also use bikes as a secondary mode of transport for their daily chores to avoid getting stuck in the traffic. Such families will also be a major market for YBR-125, as they want a mix of good looks and practicality.”
What is clear, however is that Yamaha’s entry in Pakistan will not only up the game in the motorcycle industry and potentially do away with the stagnancy that has been prevalent for years, it will give buyers multiple choices to enjoy the benefits of the technical innovations the rest of the world has been long enjoying.
