MADE IN PAKISTAN – YAMAHA WIN’S RACE IN GOOD LOOKING NEW MODEL

Bike Dealers charging Premium for New Model, Decades Old Bikes Still In Production, Earlier Yamaha resumes assembly in Pakistan, New Investment.
Some dealers are charging “premium or on money” on spot sale of newly launched locally assembled Japanese bike as buyers cannot buy it at company’s fixed price.
The new Yamaha 125cc was introduced in the last week of April, but some authorised dealers at Akbar Road, Karachi’s main motorbike market and big cities, after running out of stocks were insisting buyers to book the bike which would be delivered either after 12 days or in the first week of June.
However other dealers having stocks were demanding Rs135,000 for on spot sale as against the company’s price of Rs129,400 and another Rs4,000 for registration and lifetime tax.
It is very clear that the assembler has not deliberately cut down the production to check the buyers’ response or it couldn’t able to meet the unprecedented demand. Unfortunately assembler did not have any idea of good response from the buyers for giving CKD orders for future production.
Dealers said despite higher bike snatching/stealing cases in Karachi the response was good. Buyers usually go wild whenever new bikes find way into the market. The demand and supply gap becomes more alarming when impatient consumers from the rural areas also throng the authorised showrooms in large numbers to lift the bike at any price.
Such phenomenon of “on money or premium” is well-known for the new models of locally assembled cars. Bike dealers said that people had actually become sick of using decades-old models of 70cc bikes and were now trying to shift their focus towards over 100cc bikes due to better comfort level, fuel efficient engines and impressive designs.
They said it is too early to predict future sales scenario of Honda and Suzuki but some dealers were of the view that Yamaha may give tough time to its rivals. The main reason is that other two Japanese assemblers marketing decades old models.
Meanwhile, sales of Honda bikes during July-April 2014-15 slightly fell to 526,327 units from 535,078 units in same period last fiscal year. However Honda sales in April 2015 went up to 61,488 units from 53,030 units in March 2015.
Suzuki motorcycle sales plunged to 18,743 units in the first 10 months of this fiscal year as compared to 20,176 units in the same period last fiscal year. Suzuki’s sales in April 2015 crawled up to 2,075 units from 2,007 units in March 2015.
Import of completely knocked down kits and semi knocked down kits (CKDs/SKDs) for assembly of overall bikes rose by 22 per cent to $64 million in July-March 2014-15 from $52.5 million in same period last fiscal year.
Earlier in the month of April 2015, the new investment made by Yamaha will create jobs and bring new technologies,” said Yamaha Motor Company President Hiroyuki Yanagi, adding that, “Pakistan is all set to become one of the top global markets of motorcycles.
Addressing the inaugural ceremony at Port Qasim Industrial Zone, he appreciated the role of the federal government in helping the company set up the plant.
Yamaha Motor Pakistan (Pvt.) Ltd, a newly formed company with 100% equity from Yamaha Motor Company, Japan, is expected to produce 30,000 units in year 2015.
The factory has been established with an initial investment of Rs5.3 billion and its current production capacity is 40,000 units per year. It has hired 200 employees in the first phase. Ishaq Dar speaks.
Finance Minister Ishaq Dar, present on the occasion, said the event is not only historic for Yamaha but also special for the government as it had been looking forward to witnessing this inauguration for the last two years. “The federal government is aggressively looking for Foreign Direct Investment (FDI) because the future of Pakistan lies in it, especially in the manufacturing sector,” he said.
Talking about foreign investors’ concerns, he said, “The government is ready to help in providing additional security in any of the provinces.”
He hoped that Yamaha will get a good response in Pakistan because of the growing demand of motorcycles in the country. “The middle class in Pakistan is growing and people want quality motorcycles,” he added.
In its initial phase, the company has introduced the “YBR125” model, a 125cc engine motorcycle, with a network of 140 dealerships in different parts of the country. Equipped with new technology, industry analysts say the initial price of YBR125 (Rs129,400) is competitive enough for its rival models in the market. Pak Suzuki’s GS150 is available in Rs128,500 while Atlas Honda’s CG125 and CG125 Deluxe is available in Rs102,900 and Rs124,000, respectively.
Japanese Ambassador to Pakistan Hiroshi Inomata said that the presence of the top leadership of Pakistan in the inauguration ceremony signifies the importance of the investment Yamaha has brought into Pakistan.
“We appreciate the efforts of the government of Pakistan in bringing FDI in the country. We believe this is a win-win situation for both Japan and Pakistan,” Inomata added.
Board of Investment Chairman Dr Miftah Ismail said the middle class of Pakistan was growing at a rapid pace. From the current level of 70 million, it will touch 100 million by 2025, making Pakistan one of the top six countries with the largest middle class in the world, he added. Decades old cars, bikes still in production in Pakistan
Pakistan auto industry has been well established for the last 50 years. Around 20-25 years back, India and China were far behind than Pakistan. Because of mediocre policies, greedy rulers, bureaucracy and their hollow vision of policy making, Pakistan looks 100 years back than India and china especially in auto sector.
Many brand names still exist but their models, body shapes and engines have been completely changed decades back by manufacturers in Japan to beat competition, match technological leaps and meet emission standards.
There is no Honda CD-70cc in the world as Pakistan is the sole assembler. More than 100 assemblers are rolling out the same 70cc model with their own brand names. The government of Pakistan introduced tariff based system in 2006 for introduction of new bike models but all the assemblers were literally failed in bringing new models. Said Muhammad Sabir Shaikh, Chairman Association of Pakistan Motorcycle Assemblers (APMA).
India is producing over 100cc bikes of Euro III and Euro IV fuel efficient engines while in Pakistan the manufacture of Honda 70cc had added Euro II facility in decades old CD-70 bike in 2012.
The price of CD 70cc produced by Atlas Honda Pakistan is about Rs. 63,500, while CG-125 sells at Rs.103,000. Honda CD-70 model had inspired Chinese bike assemblers to introduce the same model at a price of Rs.37,000-40,000.
It is not clear why the Japanese bike assembler chooses to keep redundant 70cc model in Pakistan and which formula is being used to determine its price. The assembler claims to have achieved over 94 per cent indigenisation including engine parts in CD-70cc bike. Same is the case with a particular model of Honda CG-125cc. By 2002, the deletion level reached 87 and 80pc in CD-70 and CG-125.
Honda CD-70cc bike has been in production since 1973. The company made overall change in model in 1993. Muhammad Sabir Shaikh, Chairman Association of Pakistan Motorcycle Assemblers (APMA) said that actually CD 70 is not original CD 70 but actually it is CD 90 or JH 90 of Japan and China.
Atlas Honda then changed its 70 CC and 125 CC Engines in to Euro II model in 2012. The local production of CG-125 got underway in 1981-1982 followed by a big engine change in same model in 1993 and then it was transformed into Euro II in 2012.
In over 20 years this bike should have been “Made in Pakistan bike” but this has not happened as its price is jacked up when yen gains value nullifying the claim of localisation. Atlas Honda produced overall 68,637 bikes in 1996-1997 and its production swelled to 639,066 units in 2013-14.
Honda Japan has given exclusive rights to Atlas Honda for manufacturing of CD-70cc and CG-125 in Pakistan and also for their exports to various countries like Sri Lanka, Bangladesh, Afghanistan etc.
There was no formula to phase out the model. “As long as there is demand we do not feel the need for change in the model.”
Sabir shaikh said 70cc and 125cc bikes from China can be imported at $250 and $350, respectively. But they cost dearly here after paying duties and taxes.
Since the PML-N took came into power in May 2013, around 2 years have passed and the government had yet to announce a new auto policy on which Khawaja Asif, convenor was assigned the task to prepare the new auto industry policy draft by taking stakeholders into confidence for submission to the ECC.
Due to delay in AIP, smuggling of auto parts is thriving for the industry and after market and many assemblers have put on hold their local investment plans.
Sabir Shaikh said after the launch of YAMAHA YBR 125 the customers are eagerly awaiting for new models of two wheelers especially in more than 150cc as people are tired of plying 70cc bikes.
He said new models can only be brought in the market when the government will make industry friendly policies by giving relief in local taxes and customs duty on import of spare parts.
He said for the last two years, sales of Honda 125cc, Suzuki 150cc and few Chinese 100cc and 125cc models have shown positive growth. Response of YAMAHA YBR-125 is also very positive. Regular users of 70cc are shifting their focus on high engine power bikes as they are also fuel efficient. In case petrol prices come down in future the sale of high engine power bikes will swell sharply, Sabir said.
This exclusive article published in Monthly AutoMark Magazine’s June-2015 printed edition.