Sanjeev Paul is not one bit amused when asked about Yamaha’s Nano bike for India. “Cheap is not the objective,” snaps the Group Head, Purchase Operation, who is spearheading the project.
His reaction is understandable. The Tata people’s car may have caught the imagination of the world when it was first unveiled six years ago but its cheap price tag turned out to be a deterrent for potential buyers.
No surprise then that Nano in this context is not something that Yamaha wants to be associated with. And Paul’s views have already been articulated by global CEO, Hiroyuki Yanagi, when he made it quite clear in a recent visit to India that making the cheapest bike was not the Japanese automaker’s goal.
“We try to make good products for customers, which includes performance and values,” he had said. While cost and price are “one such value”, Yamaha will also focus on styling, performance and safety. “It just cannot be cost,” Yanagi said. Today, there is tremendous excitement in the India team as it steps up the gas on making this motorcycle under the umbrella of Project Indra. Expected to be priced around ₹30,000, the bike will be sold both in India and Africa, identified as one of the future growth regions for Yamaha.
Project Indra (Innovative and New Development based on Responsible Analysis) will comprise teams from India and Japan working together on this first-of-a-kind bike. Paul says the exercise has kicked off in a “systematic way” with the top managements of the Indian vendor community coming together to work with the company’s R&D teams.
“The Yamaha DNA will be there in terms of excitement, affordability, fuel efficiency and performance. No other competitor can afford this kind of package and customers will get much more in our bike,” he says.
Typically, any bike is developed based on Yamaha’s drawings which are distributed to vendors here who, in turn, make the parts. For this affordable bike, however, the company is changing its strategy. Before fixing the drawing standards and specifications, it is seeking the participation of suppliers. “We are jointly checking out how we can fix the design specifications as well as manufacturing and service standards,” Paul says. Simply put, there is a team effort in making the drawings along with suppliers so that they can contribute to ideas, detail their specifications for parts, what can be eliminated and so on. The drawings are then approved and distributed to them keeping in mind the target cost which is fixed.
“It requires a lot of involvement to get the fix on design, testing and manufacturing standards. Suppliers are now the partners and the idea is to work together and find the best solution. Yet, we will not compromise on Yamaha’s core values even while working hard on cost reduction,” Paul says.
This is where the new Chennai plant, home to the affordable bike, has a crucial role to play. The 180-acre facility, which will be commissioned in the coming months, will have 60 acres allotted to eight Japanese vendors who are part of the affordable bike drive. These include KYB (Kayaba) for suspension, Sakura for job systems and other suppliers for casting and alloy wheels. Injection moulding and painting, likewise, will have dedicated suppliers. This supply chain will play a big role in reducing costs substantially unlike Yamaha’s northern India plant which sources parts from a host of locations. All this goes into the material costs which will be practically eliminated in Chennai.
Export marketFor the moment, the company reckons that half the bikes produced in the plant will head out to Africa which promises plenty as a market for such low-cost, efficient modes of transport. More countries will also be added to the list if there is a need for such a product.
As Paul explains, the fact that each part will be designed and developed in India simply means that they will be required in countries such as Brazil and Indonesia too where Yamaha has its two-wheeler operations. “The parts business will become critical and vendors here will gain from considerable volumes worldwide,” he says.
Going forward, these cost benefits will percolate down to new products and it is equally likely that a similar strategy of participative drawings/designs could be carried out for some of them too. For the moment though, Paul and his team have their hands full as they go about making the low-cost bike a reality in 2016-17.