Yamaha India to Have a Separate Sales Entity

Japanese marquee Yamaha Motors is doing well in the Indian two-wheeler market and they are growing in a steady manner, to get maximum profit out of the Indian market, they now have decide to separate its marketing function into a separate entity. We recently share that Yamaha is expanding its manufacturing capacity and product portfolio to achieve the ambitious target of 10 per cent market share in the Indian market by 2014. And due to this expansion, the top management felt that having separate entities for managing manufacturing functions, sales and R&D, will be more functional than the current single entity model.

Economic Times reported that the sales entity will be known as Yamaha Motor India Sales and will be headed by Masaki Asano as its Managing Director. India Yamaha Motor will manage the manufacturing function, while the new R&D centre will be managed by a separate entity, which has to be announced. Roy Kurian, national business head sales at Yamaha Motor India Sales confirmed the development, he said, "This will help us in having clear focus. We just have to sell and the manufacturing operation will be managed by the existing entity.”

He said that apart from creating a clear focus on various functions, the company is looking at reducing cost and boosting its margins through this move. "At the existing price points, we are not getting the margin that we think we should get, but this is all going to change. There are whole host of cost-cutting initiatives being undertaken to boost margins," Kurian said. "This move will definitely improve the profitability. We are hopeful of improving our margins by 50-60 % in the coming years." he added.Yamaha's sales have been rising, but they are still not getting profit from the Indian market, infact they are incurring losses year by year. The accumulated losses for the company stood at Rs.1,358 crore at the end of 2011. In 2011, it reported losses of Rs. 241.66 crore, against Rs.632.31 crore loss in 2010. Through its organizational restructuring the company is aiming to break into profits in 2013. The manufacturing entity i.e India Yamaha Motors will focus on improving operational efficiency and reducing input costs while sales company i.e Yamaha India Sales will focus on building brand and selling bikes.

Some sources inform us that Yamaha aims to reduce the input costs by around 5-10%. For this they will try to negotiate with vendors for a lower price and will use other strategies like part and platform sharing among their product and other measures, so they can draw maximum profit out of the sales. The hive-off call was finalized in January, along with finalizing the measure to set up new and different entities, which could be functional in coming 2-3 months; the sales entity will have its headquarters in Chennai. This is the second time when Yamaha India is doing such operational change; in the past Yamaha Motor India Sales was in existence, but it was merged with India Yamaha Motor Private Limited, the manufacturing unit, due to operational reasons. Now, they again hive-off the entities for better management and maximum profit, hope they will get succeed this time.

Source: ET