2. Business Plan for 2003
In the motorcycle business, Yamaha Motor shipped a total of 2,290,000 units in 2002, an increase of 17 percent from 2001. In 2003, we plan to achieve an increase of 20 percent by selling 2,770,000 units.
(1) In Japan we shipped a total of 219,000 motorcycle units, down 3.4 percent from the previous year. In 2003, we project the number of shipping units at about the same level as last year -- at 220,000.
The total domestic demand for motorcycles reached 810,000 units in 2002, recording an increase over the prior year for the first time in six years. In 2003, we anticipate a slight increase in demand, to 820,000 units. In 2002, Yamaha Motor saw an increase in the shipping units of the Majesty 250, a large scooter model, and postal service vehicles, but a decrease in the shipping units of 50-cc scooters.
Overall, the number of shipping units in 2002 fell from 2001, but the decline was negligible.
From January 2003, we are introducing Taiwan-made scooters which boast a production history of more than 10 years. Starting with the Jog -- featuring a multi-function remote control key -- we will launch models offering a balance of quality and value, in both the low- and high-end product segments. In the 50-cc scooter segment, we plan to release four models, totaling about 60,000 units, in 2003.
Furthermore, we will begin full-scale marketing of the Passol electric scooter this spring, exploiting and leveraging new demand to help stem the decrease in domestic demand for 50-cc scooters. We were disappointed that the proposed lifting of the regulatory ban on tandem motorcycling on expressways did not materialize at the end of 2002.We hope that the Japanese motorcycle market will become as mature and stable as Europe, where responsible users who ride their large bikes reasonably can enjoy themselves on the road. To this end, Yamaha Motor will continue to lobby for deregulation.
(2) In 2002, the number of shipping units for export stood at 2,075,000, up 19.7 percent from 2001. In 2003, we plan to export 2,550,000 units, an increase of 22.8 percent from 2002. Of the total, knockdown parts for overseas production accounted for 1,598,000 units in 2002, up 33.2 percent from 2001. In 2003, we expect an increase of 32 percent, to 2,110,000 units.
In the United States, motorcycle demand rose nearly 10 percent, even in the wake of the terrorist attacks. In 2003, we anticipate a more limited demand increase of about 3 percent, to 960,000 units. In 2002, Yamaha motorcycle sales grew significantly in the cruiser, sports and off-road categories, totaling 183,000 units, a 9 percent increase from 2001. In 2003, however, we are being conservative in our forecast of 185,000 units, which represents a growth rate lower than the expected rate of demand increase. In any event, we will continue to pay close attention to the retail market conditions in the United States.
In Europe, motorcycle demand was 1,850,000 units in 2002. The demand is expected to dip slightly, to 1,820,000 units, in 2003, but the decline of demand seems to be leveling off. For Yamaha Motor, local production in France and Spain will increase, while we reduce the number of shipping units for complete built-up models. Overall, we expect shipping units to decrease 3.4 percent from 2002, to 355,000. During 2003, if we can successfully reduce inventories and launch new products as well as we did in 2002, we will be able to attain substantial growth in Europe.
In Asia, total demand increased 7.6 percent in 2002 to 20,100,000 units. In 2003, total demand is expected to rise 5 percent, to 21,100,000. Growth is particularly significant in Indonesia, where motorcycle demand is expected to rise 12 percent, to 2,640,000 units; India, where demand will increase 13 percent, to 5,670,000 units; and Thailand, where demand will rise 15 percent, to 1,500,000 units. In China, the government's restriction on license plate issuance in major cities continues, so we anticipate demand to be about the same as 2002, at 8,520,000 units.
Yamaha Motor got off to a slow start, behind our rivals in the Asian motorcycle business. However, in 2002, we were able to achieve our target of 1,340,000 shipping units, an increase of 28.9 percent from 2001. In 2003, we set a target of 1,800,000 units, up 33.8 percent from 2002, in an effort to recover the loss we have suffered from our previous weakness in the region. We plan to leverage the introduction of new 4-stroke models and the acquisition of management rights to expand our shipping totals in Indonesia, India and Thailand to 460,000 units, up 17 percent; 410,000 units, up 41 percent; and 190,000 units, up 22 percent; respectively.
In Vietnam, where the government's regulations are rather unclear, new products are selling well. Against this backdrop, we have increased the monthly production capacity from the previous 5,000 units to 12,000 units, and in 2003, we plan to ship 150,000 units - a 67 percent increase from 2002. In China, Yamaha launched new products priced below 10,000 yuan near at the end of 2002, the XC125 and YBR125, selling for a little over 9,000 yuan and 6,000 yuan, respectively. Because these models have been well received in the market, we expect the number of shipping units in 2003 to increase 2.6 times from 2002, to 180,000 units.
In other areas including Latin America, the Middle East, and Africa, we plan to increase shipping units by 16.8 percent, to 210,000. In particular, demand in Latin America is expected to grow sharply -- 12 percent from 2002 -- to 1,130,000 units. Accordingly, we plan to ship 170,000 units to the region in 2003, an increase of 24 percent from 2002. Major reason for this increase is the success of our highly-rated four-stroke models, such as the YBR125 and XTZ125, in Brazil, a large motorcycle market in South America. In response, we plan to ship about 150,000 units to Brazil, a 30 percent increase from 2002.
Reflecting the prolonged recession in Japan, we expect a decline in the number of boat units shipped in 2003 to 1,700, down 10.5 percent from 2002. Amid this declining demand, we are expediting business reforms with an eye to returning to profitability in fiscal 2004, one of our medium-term business targets. To this end, we are working to (1) concentrate development resources on small boats with outboard motors, (2) improve productivity by liquidating Yamaha Gamagori and increasing outsourcing, (3) reduce inventories by adopting a built-to-order system, and (4) cut costs through joint development and purchasing with Yanmar Co., Ltd.
Demand for outboard motors is slightly increasing, and, at least in advanced countries, shifting from two-stroke engines to four-stroke models, due to environmental concerns. Amid these business conditions, Yamaha Motor continues to hold the leading position in the world outboard motor market by (1) offering a full line of large two- and four-stroke models that comply with environmental regulations, (2) strengthening our business with boat builders, and (3) establishing a three-company production system with Sanshin Industries, Yamaha Kumamoto Products and MBK Industries in France.
In 2003, we have set the target for shipping units at 322,000. The figure would represent a slight increase from 2002.
In January 2003, we established ME Company, our second in-house company following IM Company. (For details, please refer to the related press release.)
Total demand for personal watercraft stands at about 100,000 units per year.
Demand in the United States, the major market for this product, will bottom out in 2003, and we expect the business to recover in 2004. Yamaha Motor has been implementing a business reform package in which, since the end of 2002, the Company has been transferring supervisory functions to the United States -- where the manufacturing plant is located -- while focusing on the development of four-stroke models. In 2003, we plan to ship 42,000 units, about the same quantity as we shipped in 2002.
Power Products and Other Products
Total demand for all-terrain vehicles (ATVs) had registered double-digit growth in recent years; however, in 2003, we expect overall demand to decrease 2 to 3 percent from 2002, to 920,000 units, due to a decline in demand in the United States. In 2002, number of Yamaha Motor ATV units shipped increased 18 percent from 2001, to 262,000. We anticipate a 3-percent decrease, to 255,000 units in 2003, although this is based on a conservative forecast.
To maintain and expand sales and profits as the ATV market reaches maturity, we intend to expand the lineup of automatic models, for which demand is expected to grow. We also plan to strengthen the production systems in Japan and the United States, and promote supply-chain management reform to reduce inventories and trade notes and accounts receivable. For golf cars, we expect the number of shipping units to remain about the same as last year at 40,400. For snowmobiles, we aim to increase shipping units by 17 percent from 2002, to 27,000, by introducing new four-stroke models.
For YAMAHA PAS electro-hybrid bicycles, we set a high target in 2002 as we introduced low-priced models. However, due to sluggish consumer spending and intensified market competition, complete built-up model and OEM shipment remained at the 100,000 unit level, a decrease of 30 percent from 2001. In 2003, we plan to ship 125,000 units, up 24.1 percent from 2002, by introducing new products.
The IM (Intelligent Machinery) business has been affected by the sluggish IT markets around the world, and sales dropped to about half of our peak sales of two years ago. Although the Chinese and domestic markets may recover in 2003, competition will intensify even more. Fortunately, our cost-cutting efforts, such as the drive to increase the in-house production ratio of vital parts have produced a profit-making business structure. Since this industry is still in a growth phase when considered in the medium- to long-term perspective, it offers great sales potential when the IT market recovers.