Japanese two-wheeler maker Yamaha on Tuesday said it is working on building in India the “world’s cheapest motorcycle”, which may be priced around USD 500 or Rs 28,000.

The company has also established a new entity at Surajpur in Uttar Pradesh -- Yamaha Motor Research and Development India Pvt Ltd (YMRI) -- which will be the hub of R&D in the country. It plans to set up second R&D centre by 2015 at its upcoming Chennai facility.

“We are aiming to develop lowest cost model and lowest cost parts in the world. The market condition keeps changing and pricing depends that. We would like to develop a cheapest motorcycle in the world which will cost about USD 500 for India as well for exports to markets like Africa, ASEAN, Philippines and Latin America,” YMRI Managing Director Toshikazu Kobayashi told reporters here.

While the company did not share any timeline for the launch for the model, Kobayashi said the bike will have an engine capacity of 100 cc or more.

He added that as a part of Yamaha’s plan for 2013, the company will work on the development of lowest cost model, followed by developing an India specific model. This will be followed by developing a global model.

Going forward, the company will expand presence in the commuter segment, especially in the Indian market.

"We have been focusing on sporty, stylish and performance bikes in India so far. Now we are looking to increase our presence in the commuter segment. Developing the product in India will give us a substantial cost advantage and enable us to price it competitively," India Yamaha Motor (IYM) Chief Executive Officer and MD Hiroyuki Suzuki said.

He said the company is looking to sell 7.1 lakh units of motorcycles and scooters this year, including 2.1 lakh units of exports. IYM had sold a total of 4.9 lakh in 2012.

"Our long-term target is to sell a total of 28 lakh units by 2018. We are aiming to sell 10 lakh units in 2015 that will include exports," he added.

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