Yamaha Motor has stated in its Integrated Report 2024 that it is “slightly behind schedule” in developing and expanding sales of battery electric vehicle (BEV) offerings worldwide but is moving development forward now with a “keen sense of urgency”.
However, the company maintains that BEVs are not the sole solution to becoming carbon-neutral. Technological innovations in hydrogen, biomass, synthetic fuels, and other carbon-neutral fuels make it possible to reduce CO2 emissions with internal combustion engines as well.
“In fact, Brazil is expected to achieve carbon neutrality ahead of many through a combination of these solutions. Yamaha Motor will also aim to explore multiple pathways to achieving carbon neutrality, rather than sticking to a single method. And in this space as well, our success here once again hinges upon whether we are closely observing our customers and markets.”
These remarks have been made by Yoshihiro Hidaka who resigned in October this year as President, CEO and Representative Director in the aftermath of a personal incident that stunned industry circles. The Integrated Report 2024 was made ready and uploaded on the Yamaha Motor website just a few weeks prior to his stepping down. Hidaka had been at the helm since 2018 when he took over from his predecessor, Hiroyuki Yanagi.
Slew of solutions
According to the report, the company is working toward creating a carbon-neutral society by implementing a mix of motorcycle technology strategies. These are centered on improving the fuel efficiency of its internal combustion engines; the expansion of its electric model lineup and promoting the use of electric mobility; and developing renewable energy-compatible powertrains.
A major factor in introducing products as part of its electrification strategy will be the trends seen in electricity use via renewable energy sources and monitoring the maintenance status of the charging infrastructure in place in different countries and regions.
As the report says, “We will begin by launching products in Europe where renewable energy accounts for a large portion of the energy used. The company will then introduce these products into the ASEAN region, where the majority of the CO2 emitted by Yamaha products originates, over the period of 2030 to 2035 in our mission to achieve carbon neutrality by 2050.”
Beyond electric, Hidaka has observed that Yamaha’s selling power as a brand will be of utmost importance in rising to new challenges. Until now, its top priority was to ramp up supply capacity in order to keep pace with demand amid the “constant tailwind it gave us”. However, things have changed with Yamaha reaching a turning point in demand and “shouldering excess inventory in most markets”.
Connecting with customers
All this is happening while the competition for securing sales is intensifying. “We believe it will become crucial whether we can get customers to fully understand the value of the Yamaha Motor brand and sell our products at appropriate prices,” adds Hidaka.
From his point of view, it is important for the Yamaha management to introspect a little more. “We must ask ourselves how we can offer products that meet the performance needs of their intended use while at a price point customers find acceptable. I am certain that never losing sight of what our customers value is what will lead to sustainability in real terms,” says Hidaka.
The big area of concern, therefore, is to check if Yamaha is “closely observing” its customers and markets. “This may be an obvious statement, but we cannot miss the mark here; the needs of customers and markets are constantly changing. Complacency brought on by one success will soon see us left behind,” he cautions.
As such, Yamaha needs to always be “acutely aware” of changes in customer values, anticipate their needs, and continue to create new Kando (the Japanese term for excitement) that will resonate with them.
“Without question, it is each and every one of our employees that will take the lead in this process. Human resources who conceive and propose ideas for new Kando and then act independently to that end are the source of Yamaha Motor’s value creation,” elaborates Hidaka.
Futile feud
The former President and CEO has also prompted a thought on what it means to be No. 1 in the world. “When it comes to motorcycles, we have many competitors and endured a bitter experience in the past when we pursued scale and engaged in fierce competition, only to be drawn into a price war that ended in attrition,” he says. The reference is to the Honda-Yamaha war of the 1980s where the former emerged triumphant.
Keeping this experience in mind, Yamaha has now decided to target premium segments of motorcycle markets where it hopes to leverage its strong brand power and offer added value. “We are determined to become No. 1 in the world in this space by being the firm choice of prospective customers,” says Hidaka.
Itaru Otani, who recently took over as Chairman of Yamaha Motor India Group, also features in the Integrated Report given his then position as Chief General Manager of Land Mobility Operations. According to him, the recovery of demand after COVID-19 was delayed in ASEAN markets and India due to the longer-than-expected impact of the semiconductor component shortages. This was accompanied by cost passthroughs of higher raw material and ocean freight costs.
“However, the recovery in demand gained momentum in the second half of 2023 partly because the supply of semiconductors stabilised,” says Otani. On the other hand, demand in developed markets is beginning to “cool down” due to inflation and rising fuel prices. Demand is also gradually declining in Vietnam, the Philippines, and Thailand, which rely on exports to developed markets, while China is feeling the effects of a real estate recession.
Premium strategy
Under these circumstances, says Otani, Yamaha aims to capture the “current strong demand” from Indonesia, India and Brazil by continuing to promote its premium segment strategy. The company is also focusing on marketing that integrates both the digital and real worlds.
“Through digital technology, we will realise our one-to-one marketing ideal by tailoring communication to each customer according to their values and purchasing trends, expanding touch points, and strengthening our relationships with customers,” continues the new Chairman of Yamaha Motor India Group .
The Japanese two-wheeler maker is also developing a system to strengthen ties with customers and build long-lasting relationships with them, which “we will expand” to Indonesia, Taiwan, Europe, and Brazil.
With the change in people’s mobility patterns after the pandemic, notes Otani, the demand for compact personal mobility has increased, as has general awareness of the environment and health. “From that, we believe that the growth of the e-bike market from use as a means of daily transportation, a hobby, or as an alternative to automobiles— especially in urban areas—will continue to grow,” he adds.
Europe slows down
Demand for this mode of transportation cooled off in the major market of Europe in 2023 due to inflation and other factors. This led Yamaha and other various bicycle makers to make production adjustments and focus on normalising inventories. “In 2024, the third and final year of the medium-term management plan, we will continue to make steady progress with inventory adjustments,” says Otani.
Going forward, the priority would be to get the company back on a growth trajectory in the next midterm plan. Specific measures include strengthening relationships with customers through the supply of e-kit electric power-assist systems, which will lead to market launches and model development projects timed to user needs.
Next-generation platform
“In addition, we will coordinate with all operative departments companywide to develop a next-generation platform for new drive units, which will enable us to develop cost-competitive, high-quality models,” elaborates Otani.
More importantly, the company will promote its premium segment strategy targeting the upper-middle class in ASEAN and Indian markets. “We will drive the development of new premium models that will enable customers to experience the high-added value of our products,” he says.
In February this year, Yamaha invested in World of River, a startup company involved in the manufacture and sale of electric scooters in India. “Through this investment, we will seek new business partnerships in India’s EV market together with World of River,” signs off Omani in the Integrated Report 2024.
