India Yamaha Motor prepared to set up a new facility in Tamil Nadu

Monday 14 May 2012, 17:37 PM by

A Memorandum of Understanding was signed between India Yamaha Motor Pvt. Ltd. and the government of Tamil Nadu according to which the former got the approval to establish a new two-wheeler factory in the state. This will be the third facility of the company after its production units at Faridabad (Haryana) and Surajpur (UP). In order to meet the increasing demand of two-wheelers in the country, this new facility has been set up. Situated in an industrial park in Vallam Vadagal on the fringes of Chennai, the facility is spread in a sprawling area of 440,000 m2.

According to the plan, the construction of the factory will begin in September 2012, and it will have a total space of approx. 114,000 m2. The expected time period for the construction of this facility is January 2014, and by then it should come into operation. During the beginning of its operations, the annual production capacity of the proposed facility will be 400,000 units, and it will provide employment to 1,800 people.

By 2018, the manufacturing capacity will be increased to 1.8 million units annually, and the manpower employed will reach around 6,500 people. As per the forecast of the company, it will invest Rs. 1500 Crores over the next five years for the new factory and facilities.

Commenting on the occasion, Mr. Hiroyuki Suzuki, CEO & Managing Director, India Yamaha Motor said, “We are very pleased with this development as this is in line with YMC’s medium-term management plans of enhancing local production levels to meet the demand growth in emerging markets such as India and their export markets. The Indian two-wheeler industry has witnessed much growth in the last few years, attributable to increased disposable income levels among a rapidly expanding middle class. We expect the industry to attain 20 million units level by 2016 when we are targeting to sell 2 million units and achieve 10% market share.” He added, “We would also like to thank all the concerned Tamil Nadu government departments, especially Guidance Bureau which had extended its complete support to this project by facilitating as a true single window body”.

A “theoretical-value-based production” concept will be employed by the new factory, which will involve manufacturing of parts and assembly of the two-wheelers completely. In the Yamaha Motor group, the new facility will be the first to have a “vendor park” in its nearby location. Hence, production operations of major external parts suppliers will be brought together thus enabling total management of external supplier parts production. In the overall marketing, manufacturing and engineering process, the losses in the field of production management and distribution will be minimised. It will also enhance the production base and convert it into a profitable unit.

Due to the stable political and economic conditions of the country, the two-wheeler market continued to develop with the passing years. The two wheelers demand in India crossed 13 million units in 2011 due to which the country attained the position of the world’s second largest market.

In the 150cc+ deluxe & premium motorcycle segments, India Yamaha Motor has introduced many new models due to which it has attained high growth in sales and exports. Compared to 380,000 sold in 2010, the company managed to sell 520,000 in 2011 thereby attaining 23% growth. Out of the increased 640,000 units sales, exports comprised 190,000 units and domestic sales accounted for 450,000 units.

According to the prediction, annual sales of Yamaha two-wheelers will cross one million unit mark for the next medium-term management plan starting in 2013. In order to meet the growing demands, initiatives are taken to enhance the annual manufacturing capacity of the factory from 600,000 units to One Million units by investing Rs. 750 crores in 2012.

For meeting the projected growth in demand, another high leap in production capacity will be required. After completing this new factory and increasing the manufacturing capacity of the current production units of IYM at Uttar Pradesh and Haryana, the company will have combined two-wheeler manufacturing capacity of 2.8 million units by 2018.

[India Yamaha Motor two-wheeler manufacturing bases]

Region Location Purpose Production Capability
2014 2018
North Surajpur, Uttar Pradesh Vehicle assembly 1,000,000 units 1,000,000 units
Faridabad, Haryana Manufacture of Two-wheeler Parts - -
South Chennai, Tamil Nadu Vehicle assembly 400,000 units 1,800,000 units

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