Japanese bet on India operations

A DIVORCE here and a disengagement elsewhere have not deterred the Japanese motorcycle manufacturers from looking at India with renewed interest from an overall strategy perspective.

Outsmarted by the TVS Group, Suzuki Motor Corporation (SMC) is re-entering the sub-continent in an aggressive way. After coming out of Escorts, Yamaha is working overtime to make a visible impact on the Indian two-wheeler market. Honda is pushing its agenda through a delicate balancing act between its motorcycle joint venture with the Hero Group, and its own independent scooter engagement. An inscrutable Kawasaki continues to place its faith in its technical partner Bajaj Auto to enlarge its presence in India.

An interaction with top Japanese motorcycle makers taking part in the Tokyo Motor Show to display their latest ware revealed that India is an unavoidable constituent of their core strategy.

Suzuki has already made it clear that its two-wheeler ambition in India is not just to take on its estranged partner, the Chennai-based TVS Motor led by Venu Srinivasan, but also to go one up on that in the two-wheeler segment. "If we can't be at least the size of TVS Motor if not more, there is no meaning to the divorce,'' said Shinzo Nakanishi, Managing Director, Suzuki Motor Corporation.

More than anything else, Suzuki has a point to prove and a score to settle in India. Not surprisingly, it is taking no chances this time around and is keen on stamping its indelible mark on the Indian two-wheeler industry.

Unlike Suzuki, the disengagement of Yamaha Motor from Escorts has been less acrimonious. Yamaha is on its own now in India. Though it sees good potential both in China and India, it has a tough task ahead in the sub-continent. Senior Managing Director (Motorcycle Operations) Takashi Kajikawa is fully aware of the difficulties ahead. For Yamaha, the immediate priority is to enlarge its visibility in India. A combination of factors — such as a piled-up loss and poor presence in the four-stroke segment — has compounded its problems in India. According to Mr. Kajikawa, introduction of quality models, strengthening and expanding its dealer network and improving cost competitiveness are among the immediate priority jobs for Yamaha to reinvent itself in India.

Mr. Kajikawa clearly wants Yamaha to improve its market share to a double-digit (now around 6 per cent) level. This is easier said than done, though. Beefing up brand awareness is indeed a key to Yamaha's strategy in India. "We need to be existing (present) in India,'' said Mr. Kajikawa. As such, any talk of Yamaha exporting out of India would have to wait, he added. In his reckoning, Yamaha should see break-even in India next year.

Honda Motor, unlike Suzuki and Yamaha, is comfortably positioned in India at the moment. It is a case of eating the cake and having it too for Honda in India. Its motorcycle venture with Hero is doing well. Yet, it is on its own in the Indian scooter segment.

Takeo Fukui, President and CEO, does not see any conflict of interest in these two ventures. Perhaps prudence dictates that Honda will do well to go along with its motorcycle partner Hero, which cannot just be ignored given its standing in the marketplace at the moment. That Honda sees India as a potential global sourcing hub is clear from the fact that its subsidiary — Honda Motor Scooter India — has just begun trial export of its moto scooter Dio to Germany since April this year. Till September end, 7,204 Dios have been shipped.

"This has proved successful for us,'' said Mr. Fukui. He is confident that Dio exports will go up to 12,500 by March. The subsidiary is now exploring new business avenues and hopes to get some orders from European countries. If things go according to plan, he visualises HMSI exporting components, too.

Kawasaki, on the other hand, is on a totally different wicket in India. It has only a technical collaboration with Bajaj Auto, whose Chairman Rahul Bajaj is known for his strong swadeshi leanings. Though Kawasaki realises that India is too big a market to be ignored, it has limitations in stretching itself there. More than anything else, the strength of its Indian partner seems to have made Kawasaki content itself with status quo in India.

Shinchi Morita, Managing Director and President of Kawasaki Heavy Industries Ltd., said, "We will continue as we are in India.'' He is convinced that Kawasaki need not invest in Bajaj with which it has only a technical collaboration. "Investment is no guarantee that a collaboration will work smoothly,'' he reasoned. In his view, the key to the success of any collaboration is good communication and co-operation between partners. Surely, he is not willing to do anything that upsets the finely built relationship with Bajaj. India is a low cost producer, he conceded.

Wind 125, produced with Kawasaki technical collaboration at the Bajaj plant, is currently exported. "If it does well, we can think of giving another model for export purpose,'' Mr. Morita said. In his reckoning, the Indian motorcycle market is moving in the direction of bigger machines. Given this, Kawasaki can aid Bajaj with technical assistance. Mr. Morita was in India in September last. He had met with Mr.Bajaj as well. Did he talk to Mr. Bajaj on equity investment? "Yes and No,'' he says. Nevertheless, it looks that the final call has to be taken by Mr. Bajaj. For Kawasaki, "it is a matter of business priority. If we put investment in our own new machines, this will benefit Bajaj as well,'' he said.

A mixed experience with partners in India notwithstanding, Japanese motorcycle makers are realising that they cannot just take their eyes off the sub-continent. India definitely has a significant role in their global strategy. Experience might have made them cautious. And even if chastened, they continue to feel that India cannot be ignored at all.

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