Yamaha to export from India to Europe

YAMAHA IS to start exporting to Europe from India as it seeks to end losses at its south Asian unit.

Yamaha will begin selling Indian-made motorcycles in Europe as early as next year, President Takashi Kajikawa said in an interview yesterday.

The Indian unit has posted losses since 2001, including an operating loss of 8.8 billion yen (£45 million) last year. The company's sales in India plunged 48 percent last year as it lost customers to Hero Honda Motors’ Splendor and Hunk models. The Iwata City-Japan based company is only using 33 percent of its manufacturing capacity in India.

"Yamaha is bleeding in India and its losses will just expand, if it does nothing," said Koji Endo, a senior analyst at Credit Suisse Group, in Tokyo.

"It has to increase operation rates and to do so, exports make sense."

Yamaha Motor India Pvt's motorcycle sales fell to 120,000 units last year from 230,000 in 2006, the company said. For help, Yamaha has turned to Mitsui & Co., Japan's second-largest trading company, to use its sales network in India.

"We want to turn the Indian operation to profit as soon as possible with the help of exports," said Yamaha's President. "Our top priority is to fill the production capacity."

The company will export motorcycles specifically developed for the Indian market with engine capacity of more than 125cc, Kajikawa said. Yamaha's export strategy contrasts with that of Honda Motor Co. which is expanding capacity in the country to meet local demand.

Yamaha said last month it will invest 7 billion rupees (£80 million) over the next three years to increase sales more than five-fold to 650,000 units in 2010.

On March 5, the company said Mitsui & Co. will buy a 30 percent stake in a new joint venture in the country. Yamaha will use the investment to develop higher-end models in a country where entry-level 100cc motorcycles are the most popular, Kajikawa said. Yamaha
will sell more powerful motorcycles, a shift from its current low-priced line-up.