Yamaha launches executive bike Saluto at Rs 52,000, takes a step closer to re-entry into 100 cc space

MUMBAI: Continuing on its top down strategy in India, Japanese two wheeler maker India Yamaha Motor took a critical step of entering 1.77 million units executive motorcycle segment by launching the Saluto at Rs 52,000 ex-showroom New Delhi. The move is considered as a stepping stone before the maker of R1 and R15 sports bike enters the 8 million units mass market motorcycle segment next year.
The Saluto will take on the segment leader Honda Shine which enjoys a 48% of the executive bike segment share today along with Hero's Super Splendor and Bajaj Discover.

Yamaha claims the Saluto is lightest vehicle in 125 cc class which delivers a fuel efficiency of 78 kilometers per litre. The vehicle is based on all new platform, whereas the engine is based on Yamaha's Blue Core Engine Development ideal, with a more compact combustion chamber than previous 125cc models released by the company.



Saluto was developed around the concept of an “Economical & Practical Indian Family Motorcycle, says Yamaha and its utility as seen by the company lies in the shared usage in the family for commuting, tandem riding, shopping trips and other local errands.

Masaki Asano, MD of Yamaha Motor India Sales Pvt. Ltd.said, the two wheeler market in India reached 16 million units in 2014, thereby,becoming the world's largest two-wheeler market. The Motorcycle market constitutes about 68% of the total two wheeler market at 11 million units. Out of this, the 100-125cc motorcycle class is the largest category at 9 million units, comprising almost 83% of the market.

"This is due to the economical nature of the category (including fuel efficiency and prices) and its practicality as it is highly praised by those purchasing a motorcycle for the first time, for pillion use, or for sharing with the family. The new Saluto is intended to expand sales in the largest demand category in India by offering one of the best fuel economy performances in the 125cc class," added Asano.

The company is hoping to sell about 60,000 units of Saluto in 2015, before volumes ramp up next year with the expansion of network. Catering to a different class of buyer, Yamaha will be expanding its footprint to 2000 touchpoints across the country, with almost 200-300 being added in the next one year.

Yamaha has set itself a target of selling over 7.5 lakh units in 2015, aiming to grow at double the market rate this calendar year, with an aim of achieving a mid-term goal of selling 1.2 million units.

Having created a magic of Rx100 years ago, Yamaha hasnt been able to make a mark in the lower displacement motorcycle space (100 to 125 cc) with its subsequent launches. However it does enjoy a strong 25% segment share in the premium motorcycle space (150 cc category) due to its sporty design and powerful performance, which has caught the Youth's fancy.

But experts say, with the Saluto, Yamaha will be catering to a completely different audience in the executive space and it will be a huge challenge to take on leaders. The entry into executive segment is seen as a stepping stone to move towards the mass 100 cc space next year and challenge Hero and Honda, which are fiercely fighting to grab pie of over 6.86 million units

The move could also help the company in understanding the market better, before they unveil their next big bet a 100 cc motorcycle next year.

Kaustav Roy, Director, JD Power Asia Pacific says, mass market is largely with Hero and Honda, who have a huge network and have strong brand affinity, Yamaha has a good brand equity, people love Yamaha, but over a period of time the values of the brand to a larger audience got a little misplaced.

"I think they need to be slightly more focussed on building the brand values. Now that they are coming back in volumes market. They will be catering to the age group of 30-35, small traders, salaried employees, government employees, who use their vehicle for utilitarian purpose, they should be to appeal to this audience, who always can go back to Splendor or Dream series. We know products will be good, but they need to address the branding part by creating an appeal for a larger audience and address the reach on the network," said Roy

India Yamaha Motor posted a growth of 16% in sales in FY-15 to 5.65 lakh units per annum, in a market which grew 8% to 16 million units. The company has a market share of around 5%, where Hero and Honda between them occupy 70% of the overall market.

The scooter sales of the company grew by 22% on the back of new launches to 2.16 lakh units, but the presence has been fairly tepid or below company's internal expectation. The motorcycle sales grew 13.27% to 3.48 lakh units in FY-15.

The company currently has Yamaha Crux and YBR 110 in the mass market 100 cc space, but has a very miniscule share of half a percent with 31000 units annual volumes. In the executive segment too, Yamaha sells as good as nothing volume at just 12,000 units per annum, Saluto will hope to change that. But the strength of the Yamaha lies in the premium end of the market above 150 cc, where it occupies almost a fourth of market giving a tough fight to the segment leader Bajaj Auto. Yamaha’s sales in the premium end of the market grew by 20% in FY-15, growing at double the pace of segment growth.