Japanese two-wheeler maker Yamaha is delaying by a year setting up Rs 1,500-crore (Rs 15 billion) new plant in Chennai due to economic slowdown, although it is going ahead with the local development of a scooter and a commuter bike in India that will hit the market by 2016.
The company, which had originally planned to start production at the new facility by early next year has now decided to commission the plant by the end of 2014 or early 2015. "We have decided to postpone the Chennai plant by almost a year as the economy is not doing that well. We have to follow the Indian market conditions and have our schedule accordingly," said India Yamaha Motor CEO and Managing Director Hiroyuki Suzuki.
The company has just started work at the new facility, which will have a production capacity of 18 lakh units per annum by 2018, he added. Initially, the plant will have an initial capacity of 4.5 units per annum with when it starts production in 2015, Suzuki said.
"The Chennai facility will produce both bikes and scooters," he added. On product development programme in India, he said Yamaha's research and development arm, Yamaha Motor R&D India, has been working on a scooter and commuter motorcycle for the Indian market, which can also be exported to other similar markets like Africa and Latin America.
"We expect these two products to be launched by 2016. These will be rolled out from the Chennai plant," Suzuki said, adding that the company is aiming for the bike to be priced below Rs 37,000 - the lowest price for an entry level bike in the market at present.
"With our brand image now well accepted in the country as a maker of sporty bikes, we now plan to focus on the commuter segment while extending our image in that category too," Suzuki said. Stressing on the significance of the scooter segment, he said: "We will be targeting the family usage category with a new product as we have already products catering to women through Ray and men with Ray Z models."
By 2016, when the locally developed scooter also hits the market, Yamaha will have at least four scooter models in India, he added. When asked if the India R&D will also develop bigger bikes, he replied in the negative saying "Yamaha's global R&D in Japan will take car of high-end models. In India, we will be focusing on commuter segment."
The company is also eyeing various exports markets for the new models developed in India as it aims to have 30 per cent of its business to come from exports, he added. On the sale front for this year, he said the company is looking at a total of around 6.7 lakh units as against 4.9 lakh units last year.
"We are targeting domestic sales of 4.6 lakh units and 2.1 lakh units in exports markets," Suzuki added. In 2012, the company had domestic sales of 3.5 lakh units, while exports stood at 1.4 lakh units.
The company's Greater Noida plant can produce 10 lakh units annually, for which the company has invested Rs 750 crore (Rs 7.5 billion) for scaling up from the previous 6 lakh units.