Domestic sales could rise 17% but exports may dip 25% in 2023: Yamaha chief

High inflation, weak local currencies in key markets in Indian subcontinent, Africa, and South America take toll on global shipments

Yamaha Motor India's domestic sales are likely to surge by about 17 per cent to 650,000 units in 2023 due to high demand for its premium vehicles, said its Chairman Eishin Chihana on Monday.

However, the company's exports are expected to fall by 20-25 per cent in 2023 due to high inflation and weak local currencies in key markets in the Indian subcontinent, Africa, and South America, he added.

"Last year, Yamaha exported 300,000 units, its highest ever. This year, we were again targeting to export 300,000 units. However, like other Indian companies, we are seeing difficulties in other countries (export markets)," Chihana told Business Standard in an interview.

He said factors such as weaker local currencies, higher interest rates and higher inflation rates are prevalent in the export markets. "We expect export volumes will be heavily down this year," he noted, adding that the export situation remains the same for other two-wheeler companies.

Brazil, Bangladesh, and Nepal are among the top export destinations for Yamaha Motor India.

The company's domestic sales jumped by 6.7 per cent to 557,000 units in 2022. Its exports from India were up 11 per cent to 300,000 units in 2022 (see chart).

He said the company expects domestic sales to be about 650,000 units in 2023. The domestic sales target for 2023 would have been higher had the semiconductor chip supply been better, he added.

Chihana noted that the company is more affected than others due to the chip crunch, as it mostly makes premium products that require more chips. He said chip supply is expected to normalise for all models by 2025.

"By the end of this year, the situation regarding semiconductor chip supply is expected to be more or less okay. However, for certain models, there will be some constraints, and some more time will be needed for the supply to be normalized," he mentioned.

The Japanese company has an annual production capacity of 1.5 million units in India. Its existing capacity utilization rate stands at 60 percent, and therefore, it has no need to establish more capacity right now.

Chihana mentioned that the company would be able to utilise 100 per cent capacity in India by 2028. Therefore, it would start planning capacity expansion in 2026, he added.

Would the company establish a new plant in 2028? "No. We have a lot of vacant space adjoining our plant in Chennai, so we can increase its capacity whenever it is required," he noted.

The company currently has 723 dealerships, out of which 191 are Blue Square showrooms for premium products. Chihana said the company plans to convert all dealerships to Blue Square showrooms by 2025.

"The company has a strong presence in the southern and eastern parts of India. Therefore, it is expanding more in northern and western India right now," he noted. Yamaha currently sells seven motorcycle models and four scooter brands in India. The company plans to launch premium bikes R3 and MT-03, which run on 321cc engines, by next March. Chihana said R7 and MT-07, which run on 689cc engines, would also be launched in India, but the date has not been decided yet.

He said the company will launch its first electric scooter in 2-3 years. "The current electric scooter customer is not going to be our customer," he mentioned.

The current electric scooter customer in India is buying the electric vehicle as per km driving cost is cheaper with electricity than gasoline. "There is not much of an emotional connection," he noted.

Yamaha wants to attract customers that are looking for sporty or stylish vehicles and have an "emotional connection" to its brand, he stated. These customers are young and living in urban areas, he added.

He said that as per his estimates, EVs would comprise 8-9 per cent of total two-wheeler sales by 2025. Currently, their share is about 4-5 per cent.