World Business

Yamaha to boost India outlets as incomes rev up

By Subramaniam Sharma (China Daily)
Updated: 2010-06-19 10:11

NEW DELHI - Yamaha Motor Co, the world's second-biggest motorcycle maker, plans to double the number of its sales outlets in India in the next five years to tap demand in villages as economic growth boosts incomes.

India Yamaha Motor Pvt may increase showrooms to 2,000, mostly in small towns and rural hubs, said Koji Arai, director and chief sales officer.

The country, home to Asia's third-biggest economy, is spending more to build roads connecting villages and improve electricity, phone and health care. The infrastructure investments and rising prices for farm produce are boosting rural incomes. Yamaha is following bigger rival Hero Honda Motors Ltd to expand in the countryside, where 70 percent of India's more than 1.1 billion people live.

"The next strong demand for motorcycles could only happen in rural and semi-urban areas as people in urban centers shift to cars," said Mayur Milak, an automobile industry analyst at Alchemy Share & Stock Brokers Ltd in Mumbai. "The only issue will be branding, because typically it is word-of-mouth publicity that works and Hero Honda has an advantage in this."

Industrywide motorcycle sales advanced 26 percent to 7.3 million units in the year ended March 31, according to the Society of Indian Automobile Manufacturers. Yamaha sold 223,305 units locally in the period, according to the group. Hero Honda, which sold 58 percent of the total in the period, gets about 40 percent of its sales from villages, the company said in March.

About 10 percent of the people living in villages in India own a motorcycle, compared with the national average of 18 percent, local brokerage Batlivala & Karani Securities Ltd said in a report in February.

Yamaha fell 0.2 percent to 1,289 yen at the mid-day trading break in Tokyo. The shares have gained 11 percent this year.

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