The Most Interesting Slide from Yamaha’s Three-Year Plan

Announcing today its “New Medium-term Management Plan” that will cover the next three years of business operations, Yamaha Motor Co.’s strategy is fairly simple, yet also very ambitious. While fighting against the global currency exchange rate with the yen, the Japanese company is hoping to release over 250 new units over its various product segments.

While this goal encompasses all of Yamaha Motors’ product lines, the most obvious additions for the motorcycle division will be Yamaha’s recently announced three-cylinder motorcycles, as well as the now confirmed Yamaha YZF-R250, a 250cc sport bike that will debut in the Indian market.

Unless you have an MBA, Yamaha’s three-year business strategy is a pretty dull read (it might still be a snoozer, even if you do have an MBA), but one Powerpoint slide struck me as interesting (you can see the full presentation here).

Outlining the growth potential of various motorcycle markets, Yamaha shows some interesting forecasting and insight into the state of the motorcycle industry, from a market perspective. Plotting GDP/capita on the x-axis, one can presume that as a market travels farther down the axis, that its willingness to purchase higher margin machines increases.

Meanwhile, plotting the penetration rate on the y-axis, Yamaha shows its ability to sell to the available motorcycle market in those regions. An increase in penetration means more units sold, and more market share gained in that region.

So in markets like India and China, where the total volume of bikes sold across all brands reaches well into the millions, a penetration rate of under 10% means Yamaha is selling only a relatively small amount of its potential in those regions.

By putting both of these metrics together, we get an interesting perspective on the margin vs. volume balancing act that occurs with manufacturers. Also of note, the box around Europe and the USA shows that Yamaha does not foresee any meaningful change in either volume or margin.

So without looking at the whole plan, which countries do you think a company like Yamaha is going to focus on for its market revival in the next three years?

Source: Yamaha