Yamaha, the Japanese motorcycle manufacturer has set its aim squarely at India's leading two wheeler manufacturer Hero MotorCorp. It is clear by the fact that Yamaha is planning to develop a new motorcycle that is priced at around $500. This bike will eventually be the world's cheapest bike if it retains its planned price tag.
Yamaha India which currently has a market share of 3.5 per cent is looking to increase it to above ten per cent by 2016. The world's cheapest bike will be an important part of its plans. India is the world's second largest motorcycle market and more than 74 per cent of the motorcycles sold are entry level bikes.
Hero MotorCorp with six entry level bike models is the undisputed leader in the segment. Other manufacturers such as Bajaj Auto, Honda and TVS have just one entry level bikes in their stables. Yamaha's cheapest bike in India is the Crux R and the proposed $500 dollar bike will be far cheaper than the Crux R.
Yamaha's plans to build the world's cheapest bike has potential not only in India but also other developing markets spread across Asia and Africa. However, analysts feel Yamaha's brand image of being a manufacturer of sports bikes and super bikes could be hit if it builds this cheap bike. The lukewarm success of the Tata Nano, the world's cheapest car should also be considered by Yamaha before it can venture in to this rechartered territory of cheap motorcycles in India.
Further, the profit margins of entry level bikes are much lower than compared to mid level and up market models. To generate sufficient profits, Yamaha will have to generate huge sales which is quite a difficult task considering the existing competition.
Yamaha has earmarked Rs.2,300 crore investment in India for new product development. The $500 dollar motorcycle is part of this. However Yamaha has not set itself a deadline for the development of the world's cheapest bike.
Yamaha is set to enter India's scooter market soon by launching the Ray scooter. It is planning to launch two more models in the coming months.